Editor's Note

January 17, 2017

From the Editor...


Happy New Year! Mutual fund boards have kicked off 2017 with full agendas despite some uncertainty about how the regulatory climate may change under the new Trump Administration. They are, of course, keeping an eye on Washington for signals of what might become of a proposal to regulate how funds use derivatives, whether the Department of Labor's fiduciary rule will be implemented as initially expected, what changes may occur to rules under the Dodd-Frank Act, and how the Securities and Exchange Commission's liquidity risk management rule is starting to be implemented, but they're otherwise getting on with their fiduciary responsibilities.


Some of the top issues on independent directors' minds outside the regulatory realm are performance, cybersecurity, distribution in guise, fees, and fund litigation. See our latest 10 Things list, 10 Things...on fund boards' agendas, for more. One thing that didn't make the list but is something with which all boards grapple is succession planning. Boards can find themselves with an empty seat around the table for any number of reasons, and sometimes they need to fill a leadership position in the boardroom when they weren't expecting to. Well prepared boards accomplish these tasks with little disruption, but it's always an exercise involves thoughtfulness and diligence. 


In the case of Harbor Funds' board, ongoing recruitment and onboarding of new trustees meant that a long-serving director's retirement didn't create a void at the end of 2016. Rodger Smith is one of the fund group's original three directors and served for 29 years before aging off the board. While the directors are likely to bring on new trustees this year in anticipation of another retirement in a few years' time, they were ready for Smith's departure. Similarly, OppenheimerFunds' New York board was prepared for the retirement at the end of 2016 of Matt Fink, an individual who worked in fund governance for decades. A veteran of the Investment Company Institute, Fink joined the OppenheimerFunds board a dozen years ago.


At John Hancock Funds, no one in the boardroom was prepared for James Oates' announcement toward the end of last year that he'd like to take a step back and not chair the board anymore. Oates remains an independent director and committee chairman and has eight years before hits the board's mandatory retirement age, so he's not going anywhere. He's been succeeded by long-serving director Hassell McClellan, who became independent chair on the first of the year.


Our first Viewpoints of 2017, penned by Niels Holch of the Coalition of Mutual Fund Investors, offers advice to directors on how to best oversee distribution fees and practices, and it's worth the read. We're always looking for experts to author Viewpoints, so please get in touch if there's something you'd like to write about.


This week, we're watching the New Jersey courtroom where closing arguments will begin tomorrow in Kasilag v. Hartford Inv. Fin. Serv. LLC, only the second case alleging violations under Section 36(b) of the Investment Company Act of 1940 to go to trial. The industry is expecting a win in this case to continue building defense-side momentum. We'll find out soon.


We here at Fund Board Views are very excited to have started our second calendar year of publication, and we hope to continue building our own momentum among mutual fund boards and those who work with them. We're always looking for constructive feedback and hope to hear from you. We're looking forward to working with you throughout 2017—and beyond.


For now,


Hillary Jackson, founding editor, Fund Board Views



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