Corporate Governance in the Russian Investment Fund Industry: Current State and Development Trends

The article examines the phenomenon of corporate governance in investment funds, as one of the key elements ensuring the effective functioning of this institution of financial intermediation. A narrow and formal understanding of the term “corporate governance” in mutual funds reduces it to an owner-manager relationship. This problem is devoid of practical sense in the context of highly concentrated ownership in these companies. The author proposes an expanded interpretation of corporate governance based on considering an investment fund as an “investment corporation”, in which the participants are various categories of investors, the fund management, as well as a number of other participants and stakeholders, depending on the nature of the investment process. Considering corporate governance as a system of control and management in Russian investment funds, the author comes to a number of conclusions. The existing model is tailored to the specifics of a particular market segment and focuses on protecting the interests of fund investors from manager opportunism. The same model, but under different conditions, becomes redundant or even destructive. Analysing the specifics of qualified investor funds’ activities allows for the formulation of appropriate changes to the corporate governance model. These include: 1) transition to a model of coordinating the interests of the investors (controlling and minority), as well as other participants in the investment process, 2) reduction of external regulation and shift to internal mechanisms for assessing and making decisions, taking into account the qualifications of the participants themselves, 3) limitation or compensation for the excessive influence of the controlling investor with a concentrated structure of investors.