These mounting challenges have resulted in a notable shift in hiring patterns for boards, as firms have begun to place greater emphasis on dealmaking and marketing expertise rather than traditional skills in finance, as reported in Investment Week last month.

Headlines have been dominated by the ongoing battle waged by activist shareholders, alongside widening discounts and cost pressures against the rise of passives, as the industry faces headwinds from within and without. Nonetheless, investment companies show signs of transformation as firms identify these concerns and begin to adapt to the changing climate.  

From within, considering the opportunities introduced through different distribution channels offers firms new avenues for growth. Additionally, bringing in board members with specialised skills and expertise demands a new perspective and approach.

Above all, the opportunity to own the narrative and engage with the end-investor has never been greater, with a multitude of tools and channels at the disposal of companies that are ready and willing to engage.

Diversifying distribution channels 

Within the UK, the broad distribution environment offers numerous different channels, with the defined contribution (DC) space in particular seeing rapid growth. However, while the DC space continues to grow in line with global trends, many wealth managers have also been the subject of mergers or acquisitions, resulting in significant consolidation within the industry and limiting choice for the consumer.

As the sector becomes increasingly competitive, and as market-cap cut-offs prevent some investment companies from being featured on buy lists, many firms are now considering other distribution channels, most notably aiming to reach the retail investor.

With new distribution channels come new criteria and requirements to meet, reflected in the JPES annual asset owner research where we clearly see the differences in priorities between distinct groups of investors. For example, the wealth audience values performance above all else, with 86% of that audience identifying improving portfolio returns as a key priority. DC Master trusts, on the other hand, prioritise safe, straightforward and low cost products for their members. 

Boards therefore need to consider both the broader investment company environment, and how to ensure their investment company meets the needs of their current and prospective investors, and how they communicate effectively with them.

Who’s on the board?

Change in the investment companies sector has come about through a combination of regulatory pressures, including the adoption of the Hamilton-Alexander & Parker Review recommendations, as well as the rising heat of activist pressure, as the ‘Saba’ effect has taken the industry by storm. Performance issues and the consequent effects on discounts has also weighed on a number of boards, particularly as the democratisation of investing, via numerous platforms and apps and the advent of new products, has enabled investors to vote with their feet.

Amid these developments, many experienced Non-Executive Directors (NEDs) are beginning to reconsider their involvement as boards are coming under greater scrutiny. These additional pressures are increasingly demanding more time and expertise from NEDs 

Nonetheless, the attractiveness of the sector remains strong for aspiring NEDs. Within the FTSE 100 and 250, 452 NEDs sit across 94 investment trusts, with an average of six NEDs per board. For each board member, therefore, the specialism they bring carries significant weight in their approach as part of the board’s strategy.

Notably, as marketing and distribution starts to play a greater role for investment trusts, 83% of the industry does not currently have this expertise on their boards.

How to engage with shareholders?

Amid this challenging landscape in the sector, both in the industry and how it is reflected in the media, lies significant opportunity to stand out, and this can be achieved most effectively through proactive shareholder engagement.

Simple changes such as having a standalone corporate website independent of the investment manager, adopting best practice when it comes to investor relations and capitalising on retail-focused investor relations platforms, engaging with investment platforms, building a corporate profile on social media, as well as taking on new mediums such as podcasts, all enable investment companies to reach the retail investor.  

Taking a genuinely proactive approach can also pay dividends. Direct, one-to-one engagement with key shareholders, via methods such as a shareholder audit, helps uncover the strengths – and perceived weaknesses – among shareholders. Folding these insights into the company’s strategic thinking ensures better alignment with shareholders and helps Boards to articulate their rationale clearly and confidently.

These findings follow a seminar JPES and Longwater hosted for Investment Company Boards in January 2026