James Carthew for Citywire Investment Trust Insider, 29 November 2024:
This has been a year of radical change in investment companies. However, unlike previous periods of heightened corporate activity among listed closed-end funds, boards have mostly initiated corporate action themselves rather than having it forced upon them.
Share price ratings in the sector weakened for a variety of reasons, but chief among them was the return to more normal levels of interest rates over 2022 and 2023 and the cost disclosure issues inflicted on the market.
Given these lay outside boards’ control, I have been impressed by how proactive they have been in tackling the problem of widening share price discounts, although in some cases they have gone too far.
Compliance burden
While there has been no change in the fundamental role of investment company boards to work on shareholders’ behalf and protect their long-term interests, the amount of work directors must do has ballooned over recent years. Monitoring compliance with a broad range of new regulations takes up far more time than it did.
One aspect of these regulations is that the composition of boards has evolved to reflect gender and ethnic diversity targets. At the same time, the presence of non-independent directors is now a rarity, which I welcome.
Some of these new directors bring a greater breadth of experience to the role. I have noticed more of a focus on marketing and communication skills, for example.
Where there have been problems, these have tended to be with boards of relatively new investment companies, where perhaps too few directors had a working knowledge of the sector and/or the underlying portfolio investments.
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