2019 in Review: Most Popular News and Views

As the year draws to a close, the MFDF’s Daily News Feed is looking back at the most popular news topics of 2019. News items on cyber security, the state of the asset management industry, and the News Feed’s new feature Board Doc drew the most hits throughout the year. A few of the popular blogs are included below.

NACD Cyber Report Finds Improved Reporting to Boards

A report from the National Association of Corporate Directors’ Risk Oversight Advisory Council reviews emerging corporate board practices in cyber risk oversight. According to the report, the quality of cyber risk information provided to boards has improved, with roughly 83 percent of public company directors and 68 percent of private company directors reporting that the quality of cyber-risk information provided by management has improved in the past two years. 

Operational Costs Rising for Asset Managers

The average cost of managing assets is climbing, consultants say, with the average cost of managing each dollar of assets going up by 4% since 2014. The “Performance Intelligence” analysis from Casey Quirk, a Deloitte business, and McLagan, a unit of Aon, points out that while industry assets under management climbed to $71.8 trillion in 2018 from $68.3 trillion in 2017, aggregate fees have declined nearly 20% in the past four to five years and overall expense growth has matched or outpaced revenue growth over the same period. As a result, operating margins fell to 32% in 2018 from 34% in the previous year. 

Bloomberg’s Dark and Gloomy Industry Forecast

A Bloomberg article further clouds the outlook for asset managers, saying the $74 trillion industry is headed towards a “a shakeout where only the strongest will survive.” The article points to the usual suspects: a 6% fee decline for mutual funds and ETFs in 2018 compared with the year before; net outflows, the fact that behemoth funds like Fidelity’s Magellan are no longer in the top 25; and that only three of the top 10 funds worldwide are actively managed funds, according to Morningstar data. 

Dear Board Doc: New Director Seeks Familiarity with Regulatory Responsibilities

Q. I am the newest independent director on a fairly large board. While I have significant corporate experience, I am unfamiliar with the 1940 Act and what it requires of directors.  What are some ways I can become more familiar with my regulatory responsibilities as a fund director?