Skin in the game/Diversity 2023: ii comments on Investec’s report

interactive investor today comments on Investec’s investment companies annual report.

There’s a school of thought that personal share/fund ownership by fund managers and, in the case of listed companies, non-executive directors, can send a powerful message of alignment of interests.

For fund managers who are not obligated to disclose, there’s a counter argument that this is a personal matter. And a manager eating their own cooking is no guarantee of a positive outcome – some might argue that having too much ‘skin in the game’ could encourage excessive or too little risk taking. 

• Research: Top Investment Trusts |Sustainable Funds List | Top UK Shares

interactive investor today comments on Investec’s annual Skin in the Game and Diversity report 2023.

Skin in the game

Kyle Caldwell, Collectives Specialist, interactive investor, says: “This report sheds a level of scrutiny on the investment trust sector that investors in open-ended funds could only dream of. 

“But there’s no question that the issue of skin in the game disclosure can be uncomfortable for some, and we respect and appreciate that. But some of the toughest questions are often the ones investors want to hear the answers to. It’s why I ask every fund manager I interview whether they personally invest in the fund or investment trust they oversee. 

“All the fund managers we’ve asked have said they do have their own money invested, meaning they share both the good and bad times with investors. Whatever side of the fence investors might sit on, today’s report sheds a spotlight on the investment company sector that many would love to see replicated in the wider funds universe. The fact that it doesn’t is because investment companies are listed companies, so the door is already open when it comes to disclosure from a board of directors’ perspective.”

Gender diversity

Caldwell continues: “The investment trust sector was once dubbed ‘male and stale.’ No longer, and it’s notable that our female customers have a clear preference for investment trusts compared to our male customers. The average female customer has 23% of her portfolio in investment trusts, versus 19% for men, according to interactive investor’s Q1 2023 Private Investor Performance Index.

"Today’s report shows dramatic progress in just 13 years, with the number of company directorships now held by women up 33 percentage points, and exceeding the 40% target set by FTSE Women Leaders Review for Women on Boards of FTSE 350 companies by 2025, early. This is a real positive for investment trust investors.”