Investing is a fundamental aspect of sound financial planning. By putting money into stocks, bonds and other investment vehicles, investors gain the opportunity to potentially grow their money and turn it into stable income through interest payments or dividends.

But investing is also an act that requires a special level of trust on your behalf. After all, it’s well known that all investments carry some type of risk. How can you be sure that your money will be invested the way you have been told it would be? And how do you know the companies and individuals you entrust with your hard-earned savings have adequate expertise to help you meet your objectives? In other words, who is watching out for your best interests when you invest money?

The answers to those questions are the subject of this article, which is designed to educate investors on the function of a mutual fund board of trustees – and introduce you to the longest-tenured board member of the Janus Investment Fund (JIF) and Janus Aspen Series (JAS) trusts.

What Is a Mutual Fund Board of Trustees?

Mutual fund boards of trustees are the primary part of an overarching fund governance framework, which is a system of checks and balances that strives to uphold the principles of investor protection that are mandated by regulatory bodies. A mutual fund board of trustees hires Janus Henderson, the advisor, to manage the mutual fund portfolios and supply all the legal, accounting and management resources to do so.

The advisory contract is reviewed annually based on a number of factors known as the Gartenberg factors, which include the nature and quality of the advisor’s services, the advisor’s cost in providing those services, the extent to which the advisor realizes economies of scale as the fund grows, the profitability of the fund to the advisor, and any “fall-out” benefits accruing to the advisor from its relationship with the fund.

The overview above paints a general picture of the function of a Board of Trustees. But to really understand what this entity does and how it benefits the end investor, we thought it would be more effective to tell the story through the perspective of a former trustee.

Meet Bill Stewart

Bill Stewart is a former member of the Janus Investment Fund and Janus Aspen Series Boards of Trustees, which oversee the management and operations of Janus Henderson’s 40-Act registered mutual funds and variable insurance portfolios on behalf of fund shareholders. The Board’s Nominating and Governance Committee identifies and recommends candidates for nomination or election based on a variety of diverse criteria, including specific industry experience, qualifications, attributes and skills, both on an individual basis and in combination with the other Trustees. Stewart recently retired after 35 years of service, making him the Boards’ longest-serving member.

In retaining Janus Capital Management LLC as the manager of the funds for which the board is responsible, Stewart and his fellow trustees’ central mandate was to protect the interests of fund shareholders. Delivering on that promise involves reviewing the fund prospectuses, discussing disclosure with Janus Henderson’s management team and seeking to ensure that the individual investments are being handled within agreed-upon guidelines.

A Journey, Not a Destination

But what is it like to serve on a mutual fund board of trustees, from a trustee’s perspective? Not surprisingly, Stewart has seen the firm – and the fund industry as a whole – undergo significant change over the past three-plus decades. As he puts it, “Serving on a board is a journey, not a destination, and it never stops in terms of needing to modify what you think today in order to adapt to the challenges that will inevitably come up in the future.”

Navigating those challenges and changes through the years has been one of most important aspects of Stewart’s role as a trustee, as well as a source of “intellectual stimulation” that he says he always enjoyed. Much of the change he has experienced has stemmed from a continually shifting regulatory environment. Stewart and the other trustees on the board must stay informed of new rules and regulations imposed on mutual fund companies by the Securities and Exchange Commission (SEC).

Stability in Times of Uncertainty

The ups and downs of the financial markets and overall economy also created a backdrop of ongoing volatility during Stewart’s tenure. The funds’ board of trustees played an important role during times of uncertainty and transition, providing support and stability to the advisor’s management and working to ensure the advisor has the needed resources to provide fund shareholders with the best portfolio management.

Stewart led an effort to establish a consistent process for evaluating the pricing of individual stocks that were not actively traded on various worldwide exchanges, such as emerging market and international stocks. He also worked to develop a reporting method that provides visibility into the use of derivative instruments and helped establish a methodology for evaluating funds in terms of performance and fees.

Stewart and the rest of the board have also been actively involved in overseeing the ongoing efforts to make Janus Henderson’s retail investor website more user-friendly and cyber-secure – an important operational function for many clients.

“I’ve kept the direct shareholder in everyone’s mind,” says Stewart. “We’ve been able to drive down costs and reduce fees for investors, which is something I’m very proud of.”

Thank You for Your Service, Bill Stewart

We at Janus Henderson are also proud of – and extremely grateful for – Bill Stewart’s contributions and support over the years. His knowledge, adaptability and, most importantly, his positive attitude, have made him a tremendous asset to our firm and our stakeholders. We congratulate him on his ability to (as he describes it), “adapt over 35 years to the continually changing environment of the mutual fund industry … and do it with a smile.”

Congratulations on your retirement, Bill! We wish you all the best as you continue your life journey.

 

Investing involves risk, including possible loss of principal and fluctuation of value.