Fund Governance Overview
Fund directors have many important responsibilities under the federal securities laws. They approve the fees that funds pay to their advisers, oversee compliance programs, oversee the pricing of fund shares, and more. Fund directors’ duties are somewhat different from those of corporate directors because of the unique structure of funds. Like the directors of a corporate board, fund directors oversee the management and operations of a company (the fund) and have a fiduciary duty to represent the interests of shareholders. Because a fund has no employees and the board relies on the adviser and other service providers to run the fund’s day-to-day operations, the board focuses on the performance and fees of these entities under their respective contracts and monitors potential conflicts of interest. In broad terms, independent directors oversee the management and operations of the fund—and are not involved in its day-to-day management.