Investment Companies Research - Skin in the game/Diversity - 2025 - Investec view: Personal share ownership by Boards and investment managers sends a clear and powerful message to both existing and potential investors. With the investment company industry enduring a perfect storm, with discounts stressed and close to levels last seen during the global financial crisis, this alignment of interest is even more important in helping to underpin investor confidence. Meanwhile, we find that there has been significant progress in improving Board diversity, both in terms of female and ethnic minority representation.
Investment Companies Research - Skin in the game/Diversity - 2025 - Investec view: Personal share ownership by Boards and investment managers sends a clear and powerful message to both existing and potential investors. With the investment company industry enduring a perfect storm, with discounts stressed and close to levels last seen during the global financial crisis, this alignment of interest is even more important in helping to underpin investor confidence. Meanwhile, we find that there has been significant progress in improving Board diversity, both in terms of female and ethnic minority representation.
Author:
Alan Brierley | Ben Newell | Elliott Hardy
Pages:
115
This report features 249 investment companies and includes Board composition, fees/total remuneration, the value of personal shareholdings and length of tenure and where disclosed, managers’ investment. We also feature progress toward the FCA’s Diversity and Inclusion targets.
Since our inaugural Skin in the Game report in December 2010, we have witnessed two seismic changes:
Firstly, it has become the accepted norm for Boards and managers to have a reasonable investment in companies. For those Board members with no investment (after an initial grace period), this stance does not sit easily with the degree of commitment now expected by most shareholders. We have certainly come a long way since our first report, when the views of many were summed up by one offshore director who berated us after publication, saying “I’m on so many Boards, I couldn’t possibly have an investment in all of them!”
Secondly, there has been significant progress in improving Board diversity, including achieving greater gender balance. In 2022, the FCA published Diversity and Inclusion targets along with transparency rules that require all UK-listed companies, including investment companies, to disclose in their annual financial reports, on a comply or explain basis, whether they have met diversity targets. These were: at least 40% of the board are women; at least one of the senior Board positions is held by a woman; and at least one member of the Board is from a non-white ethnic minority background. We find that:
43.8% of investment company directorships are now held by women, compared to just 8.0% in 2010, and this is broadly in line with the latest FTSE Women Leaders Review published in February 2025, which found that women held 43.4% of FTSE 350 Board roles. In addition, 72% of investment companies have achieved the at least 40% target. Meanwhile, the number of all-male Boards has fallen from 159 in 2010 (almost two-thirds of our original survey), to just 12 (or 4.8%), and many of these companies are facing existential challenges.
41% of senior Board positions are held by a woman, while 80% of investment companies now meet the FCA target.
64% of investment companies now have at least one individual from a minority ethnic background, compared to 29% in May 2023 (we note that in our last report, 40% of companies had not disclosed, while this has now fallen to just 4%).
