Women Trust Directors Double in Five Years

Gender equality has begun to make its mark in investment trust boardrooms with the proportion of female directors nearly doubling in the past five years.

Nevertheless, analysis by broker Canaccord Genuity shows women have a long way to go to reach parity with men. According to its latest ‘Skin In The Game’ report, women account for 19.1%, or 256, of the 1,342 directors overseeing the 400 investment trusts and investment companies listed on the London Stock Exchange. 

Although that is up from 10.2% five years ago and 15.2% in 2014 the latest tally shows the £150 billion closed-end fund sector lags the rest of the business world in promoting women to senior positions. By contrast, 23.2% of directors at FTSE 350 companies are female, says Canaccord.

While there are a dozen all-male boards in the FTSE 350 – including minerCentamin (CEY), mobile payments company Paysafe (PAYS) and online gambling company GVC Holdings (GVC) – the whiff of ‘old-boy’ networks remains strong in the investment trust world with 82 boards lacking any female representation.

Alan Brierely, head of investment companies research at Canaccord Genuity, said the report showed a ‘significant increase’ in women directors, although more needed to be done to reach the government’s voluntary target of 33% female directors by 2020.

That recommendation was made by Lord Davies in a 2015 report on gender equality.

‘Alternatives’ not that alternative

Brierley added there was a ‘marked difference’ in levels of female penetration of boards between investment trusts focused on equities, or shares, and those investing in ‘alternative’ or non-equity asssets.

While women represented 21.4% of directorships of equity trusts that fell to just 13.9% for trusts investing in alternative assets such as property and debt, he said. That left 44% of ‘alternative’ trusts and 22% of equity trusts with all-male boards, the analyst added.

Equity trusts without women directors included Aberdeen Latin American Income (ALAI), Fundsmith Emerging Equities (FEET) and Jupiter European Opportunities (JEO). ‘Alternative’ trusts looking old-fashioned and male dominated were the Doric Nimrod (DNA) airplane leasing funds, Henderson Alternative Strategies Trust (HAST), Macau Property Opportunities (MPO) and Ranger Direct Lending (RDL).

Diversity challenge

Ian Sayers, chief executive of the Association of Investment Companies (AIC), said it was ‘encouraging’ that the number of female directors had increased but agreed there was ‘more progress to be made’.

‘The AIC supports greater diversity on investment company boards and are running a number of initiatives to help. These included four well-attended seminars last year to encourage those who perhaps wouldn’t ordinarily consider a non-executive position on an investment trust to give it some thought,’ he said.

He added that more sessions will be run this year and the AIC conference for member directors include sessions on diversity.

‘Our corporate governance code recommends that the evaluation of the board should consider the balance of skills, experience, independence, and knowledge of the board and its diversity should include gender,’ said Sayers.

‘We also recommend that the annual report should include a description of the board’s policy on diversity, including gender, any measurable objectives that it has set for implementing the policy, and progress on achieving the objectives.’  

Fundsmith’s ‘shadow’

Asked for comment on the all-male identity of Fundsmith Emerging Equities directors, Martin Bralsford, the trust’s chairman, said there had been ‘extensive discussions’ on the size and diversity of its board and that the next appointment was likely to be Rachel du Gruchy, a chartered wealth manager at IAM Advisory in Jersey.

‘We have kept the size as is in the interest of cost, however, as the fund increases in size, we may soon reach a point where appointing another director is both affordable and justifiable,’ he said.

‘In those circumstances, we would expect to offer Rachel du Gruchy, who has been “shadowing” the board, a role. The invitation to Rachel would be blind as to gender. She is very well qualified and experienced.’

Leading women

The bi-annual Canaccord report reveals some of the women breaking through the glass ceiling. 

Julia Wilson, group finance director of 3i Group (III), the venture capital giant, was the only woman in a list of the 11 highest paid investment company executive directors. A total pay package of £2.77 million ranked her third, two places behind her chief executive Simon Borrows who raked in £5.82 million.

Similarly, Baroness Brenda Dean is placed thirteenth in a list of highest paid investment trust chairmen. Appointed to the chair of Empiric Student Property (ESP) when it listed in 2014, Dean earns a salary of £115,000. She is also a non-executive of house builder Taylor Wimpey(TW), not bad for a former trade unionist and Labour Party politician.

Clare Dobie emerges as a busy non-executive particularly as her portfolio of four boards includes Alliance Trust (ATST), the global trust attempting to persuade investors to appoint Willis Towers Watson as its new investment adviser.

The other board room positions of the former journalist turned investment marketeer are F&C Capital & Income (FCI), Schroder UK Mid Cap (SCP) and Aberdeen New Thai (ANW). 

Investor alignment

The Canaccord report is best known for its insight into the shareholdings of fund managers and directors in the investment trusts they run.

Designed to encourage fund managers and directors to have ‘skin in the game’ and be aligned with their shareholders, the study showed total investment by boards and managers of £1.68 billion, up from £1 billion in 2014 and £687 million in the first report in 2012.

There are 61 chairmen and directors with an investment of more than £1 million in their own trusts and 54 managers/ management teams have a personal investment in excess of £1 million.

Although a total of 15% of directors have no investment in the companies they help oversee, once those who have been appointed in the past year are excluded, the proportion drops to 10%.

Julia Wilson is again the top female director with ‘skin in the game’ with a £6.4 million stake in 3i shares, although that pales against Lord Rothschild who once again tops the list with a £331 million holding in the RIT Capital Partners (RCP) investment trust he chairs.

‘While no guarantee of superior performance, in order to align interests, investors look for directors and managers to have a meaningful personal investment in the companies which they direct and/or manage,’ said Brierley.

‘This is the unequivocal view of our clients, and we strongly believe the skin in the game sends a clear and powerful message to both existing and potential investors.’

Encouraging companies to put women on boards is part of a broader push towards gender equality in the workplace. Business with more than 250 employees will soon have to detail the amounts they pay their female and male staff, and from April next year the government is planning to publish league tables naming companies that do not pay women the same amount as men.

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