The 12 investment trusts with all-male boards

While plenty of progress has been made over the past decade, a small number of investment trusts have not moved with the times, writes Faith Glasgow.

The world of investment trusts has historically been heavily dominated by men; but times are rapidly changing, as the latest Investec report on diversity makes clear.

Investec’s Skin in the Game/Diversity survey, which (among other aspects of diversity) assesses the proportion of women across almost 1,500 chairs and directors of 293 investment company boards as at 31 May, was first carried out in December 2010. The latest set of data highlights the dramatic progress made in the past 13 years.

• Invest with ii: Buy Investment Trusts | Top UK Shares | Open a Trading Account

This includes the headline that 41% of respondent directors are now female, compared with just 8% in 2010; and just under 24% of investment company boards are chaired by a woman, against less than 4% 13 years ago.

Steady shifts in the status quo over the last decade and more are undoubtedly being underpinned by the publication last year of the Financial Conduct Authority’s (FCA) diversity targets, alongside new transparency rules. The latter require UK-listed companies, including investment trusts, to disclose whether they meet the diversity targets, and if not, to explain why not.

The new gender targets stipulate, first, that at least 40% of the board should be women, and second, that at least one of the senior board positions should be held by a woman.

The targets came into force for accounting periods starting after 1 April 2022, so those investment companies whose financial years ended in March 2023 are now having to disclose their position in regard to them. It will take almost another year before every trust has made that disclosure, but the signs are encouraging.

• Should you invest in Baillie Gifford funds or investment trusts?
• The investment trust boards with and without skin in the game

Two-thirds of those responding to the Investec survey meet the first target, for women to occupy at least 40% of the directorships.

Additionally, almost three-quarters comply with the second requirement to have at least one woman in a senior board position –chair, CEO, chair of the audit committee or senior independent director.

The trendsetters boasting the highest proportion of female directors are abrdn China (LSE:ACIC) and Scottish American (LSE:SAIN), with 80%. A further 17 investment trusts have boards where more than two-thirds of the directors are women.

It is also reassuring to see that the trend towards more women directors appears to be becoming increasingly embedded, with the decline of ‘one and done’ boards. The number of investment companies with only one woman on the board has dropped from 95 two years ago to 57 in 2023, although Investec emphasises that the improvement remains a “work-in-progress”.

Overall across the survey respondents, as mentioned above, 41% of trust directors are female, up from 34.5% in 2021 and under 10% in 2010.

To put that achievement into wider context, Investec highlights the fact that the FTSE Women Leaders Review has “established a target of 40% Women on Boards of FTSE 350 companies by 2025”. Clearly, investment trust boards are on the whole embracing the message of greater diversity with gusto.

• From Nick Train to property, the out-of-form funds pros are buying
• Bargain Hunter: sizing up ‘cheap’ investment trusts on 5%-plus yields

Andrew McHattie, who publishes the Investment Trust Newsletter, says: “The investment company sector has made great strides towards improving gender diversity at board level, with the vast majority of boards including both men and women.” 

McHattie makes the point that there is unlikely to be any direct correlation between a board’s gender mix and the company’s overall performance.

However, he adds: “The addition of new directors with different backgrounds and experience must be good for challenging the status quo and ensuring that trusts are open-minded about change and development. A good board mix is a sign of compliance with best-in-class modern governance standards.”

Still, though, a handful of trusts - 12 in all, or 4.1% of the survey – are still overseen by all-male boards. That number has dropped from 159 out of 238 respondents, or two-thirds, in 2010.

The 12 on the naughty step are Axiom European Financial Debt (LSE:AXI), Chenavari Toro Income (LSE:TORO), DP Aircraft (LSE:DPA), Gabelli Merger Plus+ (LSE:GMP), Geiger Counter (LSE:GCL), JPEL Private Equity (LSE:JPEL), Manchester & London (LSE:MNL), NB Distressed Debt (LSE:NBDD), New Star Investment Trust (LSE:NSI), Oryx International Growth (LSE:OIG), Rockwood Strategic (LSE:RKW) and Tetragon Financial (EURONEXT:TFG).

McHattie comments: “The small number of trusts remaining with all-male boards look increasingly anachronistic. The largest of them, Tetragon Financial Group, raises plenty of red flags on governance and trades on an extremely wide discount to net asset value.”

The Investec report takes a similar view. “We believe the majority of these companies are challenged,” it states.

It will be interesting to see how far respondents comply with or exceed the FCA targets, and whether there remain any trusts doggedly sticking to their all-male guns, when the survey is next run.