Activism By AIM Independent Directors Pushes Management To Lower Fees

Independent directors for AIM Funds surprised the funds management recently with a highly unusual effort to challenge the status quo, The Wall Street Journal reports. The trustees voiced their discontent about rising fees for investors, especially in the wake of

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Independent directors for AIM Funds surprised the funds management recently with a highly unusual effort to challenge the status quo, The Wall Street Journal reports.

The trustees voiced their discontent about rising fees for investors, especially in the wake of what the directors saw as foundering fund performance.

The board’s choice of the independent Bruce Crockett as chairman eight months prior to the meeting allowed for the director’s ability to offer a dissenting opinion from the executives, who have a vested interest in maximizing profits.

The fund’s executives responded to the director’s complaints with an agreement to lower two separate kinds of fees, resulting in the return of more than $20 million a year to investors.

Mutual-fund boards are supposed to protect shareholders, but often they are criticized for going along with fund managers, who tend to draw large salaries off rising fund fees, a tendency that prompted John C. Bogle, founder of Vanguard Group, to call board members “lap dogs.”

But AIM’s activism, the Wall Street Journal says, marks a rising trend among boards of directors to appoint outsiders willing to flex their muscles, and fees on hundreds of mutual funds have fallen as a result.

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