| Mutual fund governance has received a lot of attention lately, and the Canadian Securities Administrators have put forward a proposal that would implement independent governance agencies to monitor fund managers. It is argued that managers face conflicts of interests that are not solved by traditional market mechanisms. This thesis proposes to review the types of conflicts supposedly inherent to the legal structure of mutual fund trusts, and to examine whether investors can rely on market mechanisms for their protection. I will suggest that common sale practices of the industry are not necessarily impediments to market mechanisms. Rather, the problem faced by the mutual fund industry is not one of investor protection, but one of competitiveness with other financial sectors. The proposed reform will be relevant only to the extent that it deals with this latter problem. |
