In the lead up to, and following the introduction of, the RDR in January 2013 there was widespread speculation on the scale of impact it would have on investment trusts.
While it was acknowledged to be a clear levelling of the playing field in that independent financial advice must pro-actively include investment trusts in advisers’ considerations, there was a fair amount of cynicism over the extent to which this would happen.
However, one evolution that we have seen among investment companies is that of diversification on investment company boards – an unexpected but welcome progress.
There are 1,600 non-executive directorships on UK-listed investment firm boards, of which women hold nearly 230 roles. This equates to 14 per cent but it has come a long way for an industry that was referred to not so long ago as being full of ‘fuddy-duddies’.
That’s not the whole picture, either. In the past four years, 22 per cent of board appointments have been of women and this number has been growing year on year. In 2014 alone, women have been appointed to 28 per cent of investment company directorships.
There is no denying that here is an area in which trusts have made real progress. This is in keeping with that of FTSE 100 boards, where nearly 23 per cent of positions are held by women, according to the 30% Club.
Trust boards have often been berated for being stuck in the dark ages and slow to adapt. I don’t believe that’s the case, particularly since the introduction of the RDR, and their positive attitude towards the importance of gender diversity demonstrates this.
There is a gradual rise in the number of female fund managers, for example, who have taken the next step in their careers and are bringing their experience to boardroom discussions.
Furthermore, the new regulation has prompted boards to really test the validity of their fund proposition and its relevance in the marketplace.
This has to be done by non-executive directors, who understand the industry and its direction of travel. No longer can they rely on cost advantage, given the arrival of super-clean share classes.
Boards’ reactions to this changing environment has taken many different directions – such as a reduction in fees, the scrapping of performance fees, the appointment of new managers and changes to investment mandates.
It’s not just the investment trust industry that is waking up to the diversity argument either, since it is happening in the exchange-traded fund (ETF) sector, too.
Last week we saw the launch of the London chapter of Women in ETFs. More than 100 ladies attended the event – and it was standing-room only.
A primary aim of this organisation is to facilitate networking opportunities for women in the industry and it is aimed at ladies of all levels. It is building a programme of events to offer education and support, as well as encouragement to share ideas, for the current and future generation of women in ETFs.