kpmg -驾驭投资治理的复杂性今天和未来 Navigating the complexities of investment governance – today and in the future

Frontier

Advisors

Navigatingthecomplexitiesofinvestmentgovernance–todayandinthefuture

KPMG.com.au

.au

Navigatingthecomplexitiesofinvestmentgovernance–todayandinthefuture2

Foreword

Keycontributors

PLATONCHRIS

Partner,ConsultingKPMGAustralia

CHRISCALLARD

Manager,ConsultingKPMGAustralia

Frontier

Advisors

PAULNEWFIELD

DirectorofResearch

andSpecialistServicesFrontierAdvisors

SARAHCORNELIUS

SeniorConsultant,

HeadofInvestmentGovernanceFrontierAdvisors

Thejourneytowardseffective

investmentgovernanceisnotmerelyacaseofarrivingatadestination

butisacontinuousevolution.It

requiresforesight,adaptabilityand

acommitmenttobestpractice.In

thisarticlewedelveintothenuancesofinvestmentgovernancedrawing

insightsfromarichtapestryofexperiencesandperspectives.

ThroughthelensofFrontierAdvisors’threedecadesofexperienceadvisinginstitutionalinvestors–combined

withKPMG’sexperienceinworkingwithclientsacrossadvisory,auditandtax–KPMGandFrontierhavejoinedtogethertobringourinsightsandperspectivesoninvestment

governancetoassetowners

toaidtheirnavigationofan

increasinglycomplexinvestmentgovernancelandscape.

Thisthoughtleadershiparticle

combinesFrontierandKPMG’suniquestrengthsinlocalandinternational

markets,fosteringasynergistic

collaborationtoprovideassetowners

withleadingindustryinsightsthat

delivervalueandconfidenceinhandlinginvestmentgovernancechallenges.

AnextensiveinvestmentgovernancesurveyundertakenbyFrontierforthisarticlehasprovidedvaluableforesightintothechallengesandopportunitiesthatlieaheadforassetowners.

Fromtheimplementationofrobust

investmentgovernanceframeworkstothepivotalroleofleadershipindrivingexcellenceininvestmentgovernance,thisarticleoffersaglimpseintothe

intricatedynamicswithinassetownersbothinAustraliaandinternationally.

TheFrontiersurveyunderscoresthe

soberingrealitythatassetowners

facenegativeimpactstoperformanceforpoorgovernance,andpointsto

theurgencyfororganisationsto

establishaprocesstoreviewanduplift

investmentgovernancepracticesthatnotonlymitigaterisksbutalsofostersustainablegrowth.

Whetheryouareaseasonedindustryveteranoranewcomertotheworldofinvestmentmanagement,you

willfindinvaluablelessonswithinthisarticle.Wehopetheseinsightsmotivateyoutochartacourse

towardsexcellenceininvestmentgovernance,mitigatingrisksandseizingopportunitiesinanever-changinginvestmentgovernance

landscape.Pleasereachouttodiscuss,questionoraddtothesefindings.

Surveyscopeandmethodology

InNovember2023,FrontierAdvisorsconductedresearchintoinvestment

governanceacrossassetownersintheAustralianinvestmentmanagement

industry.Keyinputsofthesurveyaresummarisedasfollows:

–Representativesfrom

22differentorganisationscompletedthesurvey

–Thetotalassetsrepresentedbythese22organisationsis$800billion.

Theaimofthesurveywastocollect

informationabouthowAustralianassetownersareconsideringandmanaginginvestmentgovernancecurrently,

andhowthisapproachisexpectedtoevolveinthefuture.

©2024KPMG,anAustralianpartnershipandamemberfirmoftheKPMGglobalorganisationofindependentmemberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.TheKPMGnameandlogoaretrademarksusedunderlicensebytheindependentmemberfirmsoftheKPMGglobalorganisation.

LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation.

Navigatingthecomplexitiesofinvestmentgovernance–todayandinthefuture3

Background

Intoday’sdynamicinvestmentlandscape,theroleofinvestmentgovernance

cannotbeoverstated.Asfinancialmarketsevolve,sotoomusttheinvestment

governanceframeworksandpracticeswhichunderpinthem.Inthisarticlewe

explorethecriticalimportanceofgoodinvestmentgovernanceacrossinstitutionalassetowners,drawinginsightsfromacomprehensiveinvestmentgovernance

surveyconductedbyFrontierAdvisors.

Thesurvey,conductedamong

institutionalassetowners,revealedaconsensusamongrespondentsregardingtheprofoundimpactofinvestmentgovernancepracticesoninvestmentoutcomes.An

overwhelming68%ofsurveyed

participantsemphasisedthatassetownerswithpoorinvestment

governancepracticesfaced

disproportionatepenalties,intheformoflowerinvestmentreturns,potentiallyhavinganimpactof

1%perannum,whichoveralong

timeframecanhaveamaterialimpactonclientsand/ormembers.This

underscorestheimperativeforrobustinvestmentgovernancestructures

tosafeguardagainstadverse

consequencesinanincreasinglycomplexinvestmentlandscape.

Lookingahead,traditionalinvestmentgovernancepracticesmaynolongersufficeinnavigatingfuturechallenges.Whileonlyamere3%ofrespondentsviewedthecurrentinvestment

governancelandscapeasmarginallyworsethanadecadeago,thereisagrowingrecognitionthathistoricalapproachesmaynotadequately

addressemergingcomplexities.

Assuch,itbecomesimperativetoidentifykeyingredientsforfosteringeffectiveinvestmentgovernanceinthefuture.

Investmentgovernanceemergesasamultifacetedchallenge,particularlyforlargeassetownersgrappling

withtherapidpaceofindustry

evolution.Thesurveyfindingsindicateaconsensusamongapproximately

92%ofrespondentsthatinvestmentgovernancehasbecomeincreasinglycomplexoverthepastdecade.

Thiscomplexitymanifestsacross

organisationalstructures,necessitatingtailoredapproachestoaddress

investmentgovernancechallenges.

Thecomplexityofinvestment

governanceextendsbeyondlarge

assetowners,withmorethan94%

ofrespondentsacknowledgingthe

heightenedintricaciesfacedbysmallerassetowners.Thisunderscoresthe

universalityofinvestmentgovernancechallengesandtheneedfortailoredsolutionsacrossorganisationalscales.

Furthermore,internationalmarkets

offerinvaluablelessonsininvestmentgovernancebestpractices.While

only6%ofrespondentsviewedinvestmentgovernanceasmerelyemulatingglobalcounterparts,

thesurveyhighlightsthepotentialforcross-borderinsightsinto

marketdiversity,innovationand

riskmanagementstrategies.Such

cross-pollinationofideasenhances

organisationalresilienceandfostersacultureofcontinuousimprovement.

Asinstitutionalassetowners

navigateanincreasinglycomplex

landscape,theadoptionofrobust

investmentgovernanceframeworksbecomesparamount.Byembracingtransparency,fosteringleadershipanddrawinginsightsfromglobal

markets,assetownerscanbetternavigateinvestmentgovernancechallengeswithconfidence,

positioningthemselvesforsustained

successinanever-evolvinginvestmentenvironment.

Anoverwhelming68%ofsurveyedparticipantsemphasisedthat

assetownerswithpoorinvestmentgovernancepracticesfaced

disproportionatepenalties.

©2024KPMG,anAustralianpartnershipandamemberfirmoftheKPMGglobalorganisationofindependentmemberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.TheKPMGnameandlogoaretrademarksusedunderlicensebytheindependentmemberfirmsoftheKPMGglobalorganisation.

LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation.

Navigatingthecomplexitiesofinvestmentgovernance–todayandinthefuture4

Whygoodgovernanceisimportantandthedifferenceitcanmake

Thereisabeliefin68%ofsurveyrespondentsthatassetownerswith

poorinvestmentgovernancepracticesweredisproportionatelyimpacted

(comparedtotheupsideprovidedthroughgoodinvestmentgovernance

practices)resultinginreturnpenaltyofatleast1%perannum.So,whatotherreasonswouldanassetownerneedtodecidetheirinvestmentgovernancepracticesshouldbeimproved?

Poorgovernanceandorganisationalinefficiencies

canresultinpotentialcostsof:

Responses

80%

70%

60%

50%

40%

68%

30%

20%

5%

14%

10%

3%

11%

0%

<-1.0%p.a.

(evenworsethan)

-0.75p.a.-0.5%p.a.-0.25%p.a.0%(thereisno

costimpostofpoorgovernance)

©2024KPMG,anAustralianpartnershipandamemberfirmoftheKPMGglobalorganisationofindependentmemberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.TheKPMGnameandlogoaretrademarksusedunderlicensebytheindependentmemberfirmsoftheKPMGglobalorganisation.

LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation.

Navigatingthecomplexitiesofinvestmentgovernance–todayandinthefuture5

Investorprotection

Goodinvestmentgovernanceensuresstakeholders’

interestsareprioritisedandprotected.Itestablishes

clearguidelinesforinstitutionalassetowners,includingriskmanagementprotocols,investmentstrategiesand

disclosurerequirements.Byadheringtogoodinvestmentgovernancepractices,assetownersarecompelledtoactinthebestinterestsoftheirstakeholders,minimisingthepotentialforconflictsofinterestorunethicalbehaviour,aswehavewitnessedinthepast.

Enhancedperformance

InthesurveyFrontierranacrossinstitutionalasset

owners,30%ofrespondentsbelieveimprovedinvestmentgovernancepracticescanyieldadividendof0.75%ormoreperannum.Byimplementingeffectiveriskmanagement

processes,aligningincentiveswithperformanceand

fosteringacultureofaccountability,well-governedasset

ownerscanenhancetheircompetitivenessandprofitability.

Goodinvestmentgovernancealsoattractstoptalentandfostersinnovation,drivinglong-termvaluecreation

forstakeholders.

Improvedgovernance,greaterclarityofstepsinexecutingthekey

35%30%25%20%15%10%5%0%

investmentprioritiescanyieldagovernancedividendof:

Responses

30%32%

22%

8%8%

0%p.a.0.25%p.a.0.5%p.a.0.75%p.a.>0.75%p.a.

Marketstability

Effectiveinvestmentgovernance

promotesmarketstabilitybymitigatingsystemicrisksandmarketabuse.

Itimposesregulatorysafeguardsandcompliancemeasurestopreventfraud,manipulationandmisconductwithin

theindustry.Bymaintainingmarket

integrity,goodinvestmentgovernancecontributestooverallfinancial

stability,whichisessentialforinvestorconfidenceandsustainedeconomic

growth.Intimesofmarketvolatilityorcrises,robustinvestmentgovernanceframeworksprovideasafetynet,

helpingtopreventcontagionandsystemicfailures.

Long-termsustainability

Goodinvestmentgovernanceis

essentialforthelong-termsustainability

oftheindustry.Itencourages

responsibleinvestmentpractices;

environmental,socialandgovernance(ESG)considerations;andadherence

tosustainabledevelopmentgoals.

Byincorporatingthesefactorsinto

investmentdecision-making,assetownerscangeneratesustainable

returnswhilecontributingtopositiveESGoutcomes,whichbenefits

stakeholdersandsocietyasawhole.

AssetownerscangeneratesustainablereturnswhilecontributingtopositiveESGoutcomes,whichbenefitsstakeholdersandsocietyasawhole.

Regulatorycompliance

Inanincreasinglyregulated

environment,goodinvestment

governancepromotescompliancewithregulatoryrequirementsandindustrystandards.TheAustralian

PrudentialRegulationAuthority(APRA)ChoiceHeatmapgivesusanannual

insightindeterminingwhetherafundisprovidingvalueandgoodinvestment

performanceformembers.The

impacttosuperannuationfundsisoninvestmentstrategyandhowfunds

considerprimaryobjectivesagainst

theregulator-constructedbenchmarkportfolio.Bystayingabreastof

regulatorydevelopmentsandadoptingbestpractices,assetownerscan

avoidcostlyfines,legaldisputesandreputationaldamage.

Goodinvestmentgovernanceis

paramountasitsafeguardsstakeholderinterests,promotesmarketstability,

ensureslong-termsustainability,

enhancesperformanceandfacilitatesregulatorycompliance.Byadheringtotheprinciplesoftransparency,

accountabilityandintegrity,asset

ownerscanbuildtrust,attractcapital(ornewmembersforsuperfunds)

andcreatevalueforstakeholders.

©2024KPMG,anAustralianpartnershipandamemberfirmoftheKPMGglobalorganisationofindependentmemberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.TheKPMGnameandlogoaretrademarksusedunderlicensebytheindependentmemberfirmsoftheKPMGglobalorganisation.

LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation.

Navigatingthecomplexitiesofinvestmentgovernance–todayandinthefuture6

Investmentgovernancepracticesforthefuture

Ingeneral,investmentgovernancetodayinAustraliais:

3%

Substantiallybetterthanitwas

10yearsago

29%

Marginallybetterthanitwas

10yearsago

68%

Marginallyworsethanitwas

10yearsago

Whileonly3%ofrespondentsbelievetheinvestmentgovernancelandscapein

Australiaismarginallyworsethanitwas10yearsago,governancepracticeswhichhaveservedwellinthepastmaynotbeassuitableforthefutureenvironment.

Whileitischallengingtopredict

thefuturewithanycertainty,the

evolvinglandscapeoftechnology,

ESG,climatefactors,andregulations(tonameafew),coupledwiththe

increasingglobalisationofmarkets,willnecessitateinvestment

governancemodels/capabilitiesadaptandinnovate.

Surveyresponsesonwhatwas

thebiggestareaofthreattothe

futureinvestmentgovernancefor

aninstitutionalassetowneridentifiedthatnearlyone-thirdofrespondentsfeltthereistoomuchfocusonthe

shortterm.Criticaltofutureplanningforinvestmentgovernancefunctionswillbeconsiderationandcritiqueofhowtheroleandcapabilitiesrequired

willadaptandstayabreastoffuturechanges.

Governancepracticeswhichhaveservedwellinthepastmaynotbeassuitableforthefutureenvironment.

©2024KPMG,anAustralianpartnershipandamemberfirmoftheKPMGglobalorganisationofindependentmemberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.TheKPMGnameandlogoaretrademarksusedunderlicensebytheindependentmemberfirmsoftheKPMGglobalorganisation.

LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation.

Navigatingthecomplexitiesofinvestmentgovernance–todayandinthefuture7

Potentialconsiderationsinclude:

–Globalisationandcomplexity

Increasinglycomplexglobal

marketsdriveninpartbythe

interconnectednessofeconomieswillrequiremoresophisticated

investmentgovernancestructures.Traditionalinvestmentgovernancemodelswillneedtobeassessed

todeterminetheirabilitytohandlethegrowingintricaciesandrisks

associatedwithglobalinvestments.

–Sustainabilityand

environmental,socialandgovernance(ESG)factors

TheimportanceofESGfactors

willcontinuetoincrease,and

investmentgovernancemodels

willneedtogrowandaccount

forthatchangeanddevelopment.Furthermore,considerationof

thematerialfinancialriskcreatedasaresultoftheseincreasing

demands/expectationswillresultincertainmodelsthatdon’tadapt,becomingoutdated.

–Dynamicregulatoryenvironment

BoththeglobalandAustralian

investmentmanagementsectorsaresubjecttoconstantregulatorychange,eitherdirectlyorindirectly.Investmentgovernancemodels

thatareinflexibleorslowtoadaptwillstruggletomaintainpace

andcompliancewithcontinuedregulatorychange,increasingriskoninvestmentcapabilities.

–Datasecurityandprivacy

Recentevidenceofcybersecuritybreachescoupledwiththeever-

increasingthreatofcyberattacks,

necessitatesareviewwithaclearfocusandappreciationofthe

magnitudeofrisksucheventscanhaveonassetowners.Assessmentastotheabilityofcurrent

investmentgovernancemodelstoconsiderandaddresstheseriskswill,ifnotalreadyundertaken,

requirereviewandtesting.Futureinvestmentgovernancemodels

shouldincorporatecybersecuritypolicies,riskassessmentprotocols

andboardoversightmechanisms

toprotectsensitiveinformationandsafeguardstakeholderinterests.

–Agility

Traditionally,investment

governancestructureshavebeenrigidandhierarchal.

Withthecurrent,andlikelyfuture,environmentpresentingmore

VUCA¹characteristics,investmentgovernancemodelswillneedtoexhibittheabilitytobenimble

andadapt.

–Diversityandinclusion

Alackofdiversityandinclusionindecision-makingbodiescan

resultingroupthink,unconsciousbiasesandmissedopportunitiesforinnovationandgrowth.Inthefuture,investmentgovernance

structuresshouldprioritise

diversityandinclusion,ensuringrepresentationfromdiverse

backgrounds,perspectives

andexperiencestodrivebetterdecision-makingandculture.

1Volatility,Uncertainty,Complexity,Ambiguity

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LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation.

Navigatingthecomplexitiesofinvestmentgovernance–todayandinthefuture8

Keyingredientsfor

goodfuturegovernance

Investmentgovernancehasbeenandremainsanareawhichtodayisfacedwithchallenges,perhapsmoresothanatanytimeinhistory.Thisistrueforinstitutionalassetownersofallshapesandsizes,regulators,directors,andexecutives.

Manyassetownerscontinuetobelieve,inourview,thatgood

investmentgovernanceismorecorrelatedwithcomplianceor

processdocumentationand

defendableprocesses(for

regulators)thanbeingnecessaryfortruevalue-addingbehavioursonbehalfofallstakeholders.

Makenomistake:gooddocuments,goodprocesses,claritywithin

organisation,goodcommunications,etc.areallvaluable;however,we

wouldseetheseassecondaryintermsofkeyelementsrequiredforgoodinvestmentgovernance.

IntheFrontiersurveyconductedwithinstitutionalassetowners,wedefinedgoodgovernanceasthecapacityto

addvaluefromthecombinationof

skills,resources,timeandprocesses.

Good

Governance

=x

☆

x

x

SkillsResourcesTimeProcesses

©2024KPMG,anAustralianpartnershipandamemberfirmoftheKPMGglobalorganisationofindependentmemberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.TheKPMGnameandlogoaretrademarksusedunderlicensebytheindependentmemberfirmsoftheKPMGglobalorganisation.

LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation.

Navigatingthecomplexitiesofinvestmentgovernance–todayandinthefuture9

Therelationshipofthesefactorsis

amultiplicativeratherthanadditive

one.Thatis,thetotalresultwillbe

impactedbythesizeofthesmallestinput.Anorganisationthathas

enormousskillandmanypeoplewiththoseskills,buthaseithernotime

availableorsuitableprocessesinplacetodeploythoseskills,willendupwithazerooutcome.

Investmentgovernanceisevolvingandthereisnosuchthingasstationary

bestpractice.Firstly,thereisnosingleoruniversalwayofachievingbest

practiceandsecondly,weneedto

recognisetheconstantevolutionof

investmentgovernance.Inseeking

outbetterinvestmentgovernance,

thefactorsthatarecriticalinleadingtoanoptimaloutcomearethose

whichallowformorecapacityeitherineachofthefourbuildingblocksofourequationorthosewhichrebalancevariousitemstofocusonmore

importantstrategicitems(whichleadtoahigherequationoutcome).

Inseekingoutthesefactors,readersneedtorememberinvestment

governanceisnotthesameas

corporategovernance(althoughtherearemanyoverlaps)andisalsonotthesameasESG.Investmentgovernanceissingularlyfocusedonhowtodeploytheaboveelements(whicharefiniteandconstrained)inordertoachieve

thebestinvestmentoutcomes,

balancingthewideandincreasingcriteriaagainstwhichinvestmentsarejudged.

Thereisareasonableamountof

literature,papersandthoughtpiecesoninvestmentgovernanceandtherearesomerepetitiousthemeswithinthose.Whilemanyhavesensible

elements,theysometimesfailto

conveywhythesefactorsarekey

andhowtheycontributetoimprovedinvestmentgovernanceoutcomes.Inourview,itcomesdownto

howeachfactorrelatestothegovernanceequation.

IntheFrontiersurvey,itwas

conductedofinstitutionalasset

owners,itwasrecognisedthereisaveryclearrecognitionofthepotentialvalueeitherderivedorerodedfromthegapbetweengoodandpoorly

governedfunds.

–62%ofsurveyrespondentssaidthedividendorbenefitofgoodinvestmentgovernancecould

amountto0.5%p.a.ormoreovertime.

–68%ofsurveyrespondents

saidthereturnpenaltyofpoor

investmentgovernancecouldbeasmuchas-1%p.a.orworse

overtime(and82%said-0.75%orworse).

–Forexample,insuperannuation

terms,foranewworkeraged25,joiningemploymentandstartingtosave,thegapoverafullworking

lifecouldbeasmuchas40%or

more(or$500,000ormore)in

theexpecteddifferencebetweenafundwithgoodversuspoor

investmentgovernance.Thisistheviewofassetowners,notFrontierorKPMG.

So,whatarethekeyattributesneededforbetterinvestmentgovernanceinourview?

NO.

AREA

DESCRIPTION

WHYITMATTERS

1.

Clarityofmission

–

–

–

Aclearunderstandingofthebeliefsandpriorities.Thesedonotneedtobelockedinandcan,andprobablyshould,changeovertimebutaveryconcentratedfocusonthemost

importantitems(whichcanalsovarybytimeperiod)iskey.

Aclearunderstandingofthe

trade-offsbetweenvariousitems.

Adepthofknowledgeand

understandingofanorganisation’scompetitiveadvantagesand

weaknesses(whichcanassistin

understandinghowanorganisationmaypursuethesevariousgoalsandwhereitmaypartner).

Clarityenablesorganisationstoassessonanongoingbasiswhattheyneedtofocusonandwhereshortfallsexist–whichthenenablestheefficientdeploymentofskills,resourcesandtimetofocusonthoseareasofhighestimportance.

Interestingly,inFrontier’ssurveyofasset

owners,1in10peopleateveryfundsaid

noteveryoneunderstandsthetrade-offsandgoalsfortheirfund.Additionally,1in10saidseniorinvestmentstaffarenotclearonkeyinvestmentprioritiesinthenext1–3years.

©2024KPMG,anAustralianpartnershipandamemberfirmoftheKPMGglobalorganisationofindependentmemberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.TheKPMGnameandlogoaretrademarksusedunderlicensebytheindependentmemberfirmsoftheKPMGglobalorganisation.

LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation.

Navigatingthecomplexitiesofinvestmentgovernance–todayandinthefuture10

2.

Commitmenttomission

–

Theleadershipteam,theboard,

investmentcommitteeandthe

executiveneedtounderstanddeeplytheitemsaboveandhaveacollectiveandstrongcommitmenttothese.

Oftenininvestmentsthereare‘shinyball’

distractions–thelatestthemeortrend.

Thereisalsopotentiallyafairamountof

FOMO.Beingcommittedtoasetofideals,areasoffocusandbackingupthefundandtheteamontheseareasiskey.Again,doingsoensuresthefocusonskills,resourcesandtimetothoseareasofhighestimportance,

withoutshort-termdistractionsorcapturingtime/resourcesorskillstoeffortswitha

lowermarginalvalue.

3.

Challenge

anddiversity

–

–

Itisvitalthemissionandkeyareasarereviewedperiodically.

Thismayinvolveexplicitchallengestoexistingparadigms,devil’sadvocatespushingcountercases,andmore.

Secularforceschangeovertime,regulationchangesovertime(forexample,nosuper

fundfocusedonYourFutureYourSuper

(YFYS)fiveyearsagoandthisnowinfluencesfundstoday)andtheviews,make-upand

experiencesofexecutivesalsochangeovertime.Itisimportanttodebate,reviewand

reassessthehigh-levelmissionandother

elementsperiodically.Gettingadiverserangeofviews,hearingtheseoutandvotingon

aspectsisimportant.Butthen,agreeingtoasetofprinciplesfortheforeseeablefutureandhavingacollectivebackingbyeveryoneisalsoimportant.

4.

Incentives

–

Ensuringexecutivesandboardand

investmentcommitteemembershavegenuinealignedinterestswithend

members/stakeholders.

Thisisevenmoreimportantgiventhe

multitudeofdifferentlensesappliedto

portfolios.Manyteamsareincentivised

aroundalpha(outperformingbenchmarks).Overall,webelievedeliveringonthe

commitmenttomembers/stakeholdersismostimportant(andthisis