An article published by BoardIQ on June 19 entitled “Morningstar Takes a Different Route in Forming New Board” discusses the unusual approach taken by soon-to-launch Morningstar Funds in the formation of its fund board. Selecting an independent chair, and subsequently entrusting them to “take the lead” in identifying the other independent members is “an interesting way to go about it,” stated investment management partner and practice co-leader Tom Hiller in the article, adding that it this approach places “a lot of faith in the director’s judgment. That normally is a group process driven by a committee rather that one individual.” Mr. Hiller continued, cautioning that this may establish a board “with fewer relationships at the management company. … From a practical perspective, that could be riskier for an adviser, which wants to make sure directors believe in what the company is trying to accomplish while also carrying out their fiduciary duties.
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