External Trustees Matter
Investors should ensure that the fund is governed by a suitably qualified, independent trustee responsible for acting in the best interests of investors. Without an external trustee, everything the Investment Manager is telling you could all be just ‘lip service’.
Independent Monitoring - An external trustee provides unbiased oversight of the fund’s operations, ensuring that all lending, repayment, and fund management activities are conducted transparently and align with investor expectations.
Enhanced Accountability - External trustees are legally obligated to uphold fiduciary responsibilities, ensuring that all fund activities prioritise investor interests.
Regulatory Compliance - External trustees ensure that the fund complies with complex regulatory requirements, such as lending limits, borrower disclosures, and investor protections.
Risk Disclosure - External trustees facilitate clear and accurate communication of credit risks, repayment schedules, and portfolio performance to investors.
Reliable Communication - Investors receive clear and accurate information without the risk of overstatements or omissions by fund managers.
Independent Governance - The presence of an external trustee signals a commitment to transparency and ethical management, building credibility with current and potential investors.
Risk Mitigation - External trustees often oversee audits and compliance reviews, ensuring that the fund’s practices remain transparent and aligned with investor agreements.