Economist: Make Mutual Fund Boards Optional

After six years of research Paula Tkac, an economist for the Federal Reserve Bank in Atlanta, has concluded that mutual funds don’t need boards of directors. Speaking at a recent conference, Tkac said, “A corporate governance model doesn’t really seem to fit with the realities of the mutual fund marketplace.”

Rather, she suggested, investors should decide whether they are willing to pay the fees to compensate board members. Tkac told the conference that “it’s not clear that the board is providing any monitoring that the investors can’t do on their own or with help from advisers and information suppliers.”

Critics of the proposal, according to Investment News, say Tkac underestimates the value of having a board, such as the benefits derived from the credibility of oversight.