Practical Guidance for Fund Directors on Oversight of Subadvisers

In April 2026, MFDF published Practical Guidance for Fund Directors on Board Oversight of Subadvisers, an update from our 2009 whitepaper that covers the significant changes in regulation and the industry that have occurred since. While the bedrock legal framework and governance principles of board oversight of subadvisers have not changed, challenges for fund boards lurk in the regulatory requirements of the last decade (e.g, Liquidity, Valuation and Derivatives Rules), growing investor demand for complex new products,  and evolving risk management issues around cybersecurity and artificial intelligence. The updated paper aims to help fund boards effectively navigate these oversight areas in their approval and ongoing oversight of subadvisers. Included in the report are points of interest including:

• Different subadvisory arrangements, exemptive relief, manager of managers structures, affiliated and unaffiliated subadvisers.
• Considerations for approving the subadvisory contract, oversight of subadviser investment performance, fees and profitability.
• Oversight of and working with compliance.
• Oversight considerations with respect to the valuation of securities, derivatives, liquidity, alternative and other complex products, and digital assets.