Trustnet Magazine Issue 43 September 2018 | Page 24
An independent board of directors is often cited as one of the advantages of investment trusts . But , asks Cherry Reynard , how much value do they really add ?
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An independent board of directors is often cited as one of the advantages of investment trusts . But , asks Cherry Reynard , how much value do they really add ?
Getting onboard
The oversight of an independent board has been a key selling point for investment trusts . The board should represent the interests of the shareholders , replacing poorly performing management teams , negotiating fees and ensuring good communication . But , as the recent spat between Invesco Perpetual and the board of the Invesco Perpetual Enhanced Income trust has shown , it is an imperfect system . Do boards really add value ? The Invesco example seemed to be a personal clash . The board exerted some pressure over fees , the relationship deteriorated and Invesco took the rare step of resigning as manager of the trust . Shareholders were understandably concerned to lose the services of the highly regarded pair of Paul Read and Paul Causer . The relationship has since been repaired , but not without the resignation of two board members . The affair highlighted the potential tensions between board members and investment managers . There are other examples where board oversight has not seemed to deliver tangible benefits for investors . A notable case would be British Assets , moved from F & C Investments to BlackRock in 2015 on performance grounds , it was then moved to Aberdeen after performance weakened further under