Is the mutual fund board still necessary to provide investor protection, or would it be more cost effective, efficient, and reflective of current industry realities to eliminate the board's oversight of the fund manager, and allow fund family/companies to offer commingled fund products directly?

You answered:

• Yes, can safely eliminate the board: 39%    
• No, need to keep the board for investor protection: 61%

The mix of regulation and rules in the mutual fund and collective scheme industry is redundant and inefficient. Reforms could offer greater efficiency and potentially lower investor expense.

You answered:

• Agree: 88%    
• Disagree: 12%  

As demand for fund products begins to cross borders, a global convergence of regulation of commingled investment funds is desirable.

You answered:

• Agree: 93%    
• Disagree: 7%  

Please list a country you think exhibits best regulatory practices.

 You answered:

General comments on mutual fund reforms:

Boards need to be more independent.

Sorry I don't have enough knowledge to comment on the above questions. I do believe that fund companies vote in favor of management in proxies. The shareholder's voice is not heard in proxy voting.

I suggest a common list of items that would be answered briefly and placed on the same page in all fund reporting. A separate section should deal with expenses explicitly and succinctly.

The form of ownership of the majority of mutual funds companies does not serve investors. XXXX's model, I believe, is unique;serves its shareholders BEST! During the 30 years I worked in the investment business as an investment analyst, I often asked my colleagues at the various firms where their money was invested...confidentially, of course. If they had an option...there was an account/s at XXXX! Many a broker UPON RETIREMENT quietly admitted that for years he has had some of his monies at XXXX! I think that tells a most important story! Many of these colleagues were highly regarded investment analysts...and they had intimate knowledge of the products sold by their firms....and yet they had significant monies at XXXX! Enough said! I'm not sure how to answer the questions ...the XXXX model is fair, efficient, cost effective! Fortunately, the culture of the firm is about honesty and value to the customer. Alternative models leave the key players conflicted!

I had no idea that there was such a discussion concerning (I assume) US mutual funds. I would bet that the US industry is still among the most transparent, etc. in the world.

It is necessary to take cost-effective measures to avoid the unfairness and conflict of interest. Of course, those measures must be differentiated between active and passive funds.

I quote a statement made by Mr. Diermeier in The Role of CFA Institute - The Future of Life-Cycle Saving and Investing: "Fees should be so transparent that paying them should be like writing a check out of a checkbook". What he says is what I think is needed - investors should be forced to realize what they pay to fund companies by paying for fees separately, not as a reduction to unit value. Expecting the fund industry or even CFA institute members (code of ethics notwithstanding) to look after the interest of the investors is like asking the fox to mind the chickens.

the decision to distribute profits in a mutual fund is made by the sponsor fund board not by the Trustee (who are also "captured' by the fund company) and the decision is based on marketing reasons as opposed to fund purpose. Mix of reforms and rules do indeed increase redundancy - they also are the result of regulatory capture – there is therefore the need to address how developing capital markets can develop domestic capability without being annihilated by foreign competition while protecting the investor. there is therefore the need to make GIPS adoption more affordable the global convergence of regulation in commingled investment funds is desirable but supporting professions are still inadequate in portfolio construction

Transparency - detailed manager/board ownership in fund, proxy votes, etc. Independent board/chairman

The most effective way to align mutual fund managers and their investors' interests is still requiring/recommending mutual fund managers to invest in the funds they manage (given min sum of investment for mutual funds are generally very low)

The mutual fund industry has far too easy an ability to fleece naive investors with fees while not being strictly held to a high level of fiducuary duty. There is a crying need for uniform, efficient, but mostly strick regulation.

There are tens of thousands of mutual funds providing a huge amount of competition in every category. As an industry that believes in efficient and free markets, we should be educating the public and legislators that regulation will only lead to increased cost and inefficiency, and that best practices will win out over time via competition and investor education and scrutiny.

It is about time.

It must involve SRIs, advocacy groups and government regulators

mutual fund industry has to be regulated as it works in a fiduciary capacity, managing public money. Indian mutual fund industry, is i guess the most over regulated, but i guess it came about due to malpractice followed by the industry in its earlier years.. Regulators should work over time to ensure investors get access to products at the lowest cost. I am not against distributors but the cost of selling and distribution that the fund charges should be fair and transparent.

The mutual fund reforms at this time is considered very appropriate. The current management approach of mutual fund in so many countries shows that investors interest is not well (if at all) protected in my own country (Nigeria), there is no clear generally accepted regulation on mutual fund, and investors are the most affected by this situation. It is difficult to differentiate the fund managers from the fund board and the sponsoring firm. It is suffice to say that no regulation exist.

Desperately needed in India

Go global

The mutual fund industry is under heavy attack by alternative vehicles that offer more efficient delivery. These vehicles usually suffer from one major drawback, though, and that is the lack of investor protection in case of default of the issuer.

Boards are still necessary as without them, there is no check / control over the activities and practices of the sponsor. However, it is true that fund boards / trustees often have little power (or rather, do not exercise their power). In most cases, the sponsoring firm and fund manager are largely left to run the schemes, so that the funds are just products of the sponsoring firm. Reforms are needed to strengthen the role of the board / trustees and to enhance their independence. At present, it is often not fully transparent to investors that boards / trustees are independent, given that the schemes are largely products of the sponsoring firm.

Regulations should be aligned in order to create a level playing field, lower costs and remove the need to keep several fund umbrellas in different countries for regulatory reasons. Also, fund managers can choose the most tax-efficient country to domicile their funds. Now, many European fund managers chose Luxembourg to domicile their fund umbrellas. As a result, investors are suffering from lower yields due to the limited tax treates Luxembourg has with other countries making it difficult to reclaim dividend taxes. Although stock lending can mitigate this problem, opening up the massive pools of equities to hedge funds and other parties for shorting creates a whole new set of potential problems and conflicts of interest. How can you defend opening up your portfolio for stock lenders when these same people can be the cause of (perhaps your more illiquid) portfolio holdings to drop in price?

A global convergence of regulation is a slow process and should result in a framework that is superior to any of the existing country regulations.

ETF is much reasonable compared to mutual fund.

A global convergence of regulation is a slow process and should result in a framework that is superior to any of the existing country regulations.

Mutual fund manager should be authorized to shift investment from one industry to another under investor interest. Fund manager should have complete freedom but making sure he/she is acting in common interest. 

The pooled fund industry is in my opinion far worse. Boards are necessary as most MF shareholders don't know or care until something goes wrong, and then it is often too late and catastrophic. The existence of pockets of high fee mutual funds is also illustrative of uncaring/unwatchful shareholders (as well as , I guess, derelict boards). industry than the mutual fund industry and some regulation should be put in place

Establish a template for a regulatory regime (global) and add new rules sparingly. If problems pop up (day trading, etc) try to come up with the least expensive and invasive way of dealing with it. The current multi-body oversight and cryptic rule system is very expensive and distracting for mutual fund companies.

No reason why Canadians shouldn't be able to buy mutual funds directly from firms established in countries with well regulated securites markets (and vice versa regarding purchases of Canadian mutual funds). Much of what passes for "regulation" is really just trade protectionism in disguise.

Urgent to provide - transparency, - governance and - recourse through a fundholder's bill of rights.

regulation does not work

I agree with all the issues pointed out in your introduction above. As a former SEC examiner of mutual funds, I can attest to the fact that fund boards provide a false sense of security and protection to individual investors. Becoming a fund director is nothing more than a pension from the fund's advisor based on a career in business that may have had nothing to do with the mutual fund industry. There is no incentive for the directors to put shareholder interests above their own or the adviser's who awarded them this position and pension in the first place.

The answer to Number 1 could go either way. The Board should offer more protection. However, many fund Boards are not doing their job in which case they are just additional costs.

Boards need to be more proactive in looking out for investor interests, should be more independent from the fund family and manager. 

Industry needs to provide full disclosure on fees and performance.

It seems that few industries are paid such high fees to under perform its benchmark annually than the actively managed mutual fund industry, with a few notable exceptions.

Mutual fund boards are not effective advocates for the shareholders of their funds, BUT THEY SHOULD BE. The need for investor protection has grown as the number of funds has grown significantly over time. The problem is not inherent in the structure of a board to oversee the fund operations and hire/fire the managers. However, in practice they function as a rubber stamp of the fund company's decisions.

The investment committees of mutual funds should foster the participation not only of different financial market/industry experts, but also officers from the risk management areas - even compliance in those cases where needed - to strengthen its governance mechanism of checks and balances between different viewpoints.

In Canada, High MERs should be seriously looked at, especially for companies who's business model is apparently designed to foster close advisor client relationships, which in turn is utilized to overlook high fees, and potentially mediocre returns. That problem is magnified when you consider that average MERs in Canada are around 2.56%, as compared to 1.11% for the U.S. The argument that U.S based companies manage more volume/ assets thus bringing down their MER would to me seem not valid, as most European countries much smaller than Canada have lower MERs.

In the US, the overall impression is that the Board is just a puppet of the fund. There ought to be a more impartial way.

This is quite a US oriented series of questions. In the UK, for example, mutual funds, unlike closed ended funds, don't have to have independent boards. The issue is not so much whether they should, but whether investors understand what they have got. Investors should not have the illusion of independence if it is not a reality, but there is nothing necessarily wrong with a mutual fund controlled by the Manger, if everyone understands this is what they are buying.

Way too much regulation. Repeal Sarbannes-Oxley! 

These days people are planning and there is considerable increase in investment in MFs since 2000. So reforms should be carried out to make it more professionally organised and regulatory authority should see to the increasing loads of these MFs.