Introduction

In institutional funds generally and defined benefit pension funds specifically, investment ‘governance’ describes the system of decision-making and oversight that is used to invest the assets of a fund. The responsibility for this investment role lies with trustees or other types of fiduciaries who are faced with high-level investment decisions (where they will typically take full responsibility) and more detailed implementation actions (where delegating to others is more likely to be used and the fiduciaries’ role becomes one of framing the delegations and monitoring the actions of the delegated agents).

Investment governance, therefore, employs skills, resources and processes with the purpose of creating value for institutional funds.

There is a distinction between the inherited structure of investment institutions — normally framed by statute, property rights and covenants — framed by the rules and processes that sustain their performance.