The job of caretaking a mutual fund has many areas of responsibility, so in response to SEC Chairman William Donaldsons request, the Mutual Fund Directors Forum has put together a report detailing 38 best practices.
The 58-page document details four main areas where directors need to focus attention: soft dollars, directed brokerage and revenue sharing; director independence and review of conflicts of interest; review of management agreements and management fees; and valuation and pricing.
Following the guidelines detailed in "Best Practices and Practical Guidance for Mutual Fund Directors" will make a directors job much easier, as it provides a blueprint for shepherding a mutual fund.
"Mutual fund directors who follow the recommendations in the Forums Report will be greatly aided in monitoring areas where conflicts exist between the interests of fund shareholders and the advisers who manage their funds," said Allan S. Mostoff, president of the forum. He described the report as a "must reading for independent mutual fund directors."
"The Best Practices Report complements the Commissions recent rulemaking initiative to enhance the fund governance framework and represents an independent director-led effort to provide meaningful guidance to fund directors," Donaldson said. "I therefore encourage all fund directors to review and consider carefully the Report recommendations."
Copies of the report are available from the Mutual Fund Directors Forum.