Letter from the Chairman

2020 will go down in history as a year that none of us can ever forget—no matter how much we would like to. It was a year of turmoil, fear, and reckoning. Yet for the regulated fund industry, this has also proven to be a year of resilience, transition, and great hope. We will come out of the trials of 2020 stronger and more committed than ever to serving our hundreds of millions of investors around the world.

The COVID-19 pandemic and its economic and financial consequences, of course, shaped the year and touched every aspect of our business. Here, our industry displayed enormous creativity, energy, and strength—as did our trade association. Both ICI and its member firms shifted almost overnight to virtually 100 percent remote work, as both the health crisis and market turmoil raged.

Yet firms met their commitments to shareholders, maintaining services and keeping up with flows through turbulent markets. And the Institute met its commitments to members—bringing the industry together, advocating for its interests—as detailed in this Annual Report. However the pandemic evolves, our response will ensure that 2020 will go down in our history as one of the industry’s finest hours.

Even as our world grappled with health and economic crises, growing tensions over issues of justice and equity roiled America’s social fabric. While these concerns intensified, they are not new. For several years, the fund industry has increased its focus on enhancing diversity and inclusion—on ensuring that our workforce and our boards reflect the varied backgrounds and perspectives of the investors and society we serve.

As an industry, we can—and will—do more to foster a more diverse and inclusive workforce, and ICI provides a critical forum to help encourage and execute that work. In January, the Board of Governors created a board-level Diversity and Inclusion Working Group, which I had the honor of chairing. The working group identified two core areas for focus: improving our understanding of the demographics of our industry—because we can only manage if we measure—and expanding the pipeline of diverse talent entering our business at all levels of seniority.

In October, the Board endorsed the working group’s recommendations, raising our dedication to this cause to a new level. We recognize that we face a long journey toward a difficult goal—but we are determined to succeed.

For ICI, 2020 was also a year of significant transitions. After more than 16 years as president and CEO—and more than two decades of service to the Institute—Paul Schott Stevens is retiring.

Paul’s tenure has encompassed eventful and tumultuous years. Paul took office as the industry was dealing with the aftershocks of the late trading and market timing scandal. A very few years later, we were plunged into the global financial crisis. That triggered years of work on two rounds of reform for money market funds, intense legislative activity around the Dodd-Frank Act, and a debate about funds’ role in financial stability that still rages.

In the midst of all this, Paul led the effort to stand up ICI Global—a vast expansion of ICI’s international presence, with offices in London and Hong Kong, significant support from the entire staff, and a growing reputation for rigorous analysis and strong insights among policymakers all around the world.

Throughout his long tenure, Paul has consistently exhibited sound judgment and steady leadership, a farsighted vision for where our industry is going and what our shareholders need. He has consistently pushed to make the Institute a stronger and more capable organization, in every area. And he has been an outstanding spokesman for our industry, testifying 24 times before Congress and speaking to hundreds of audiences about a wide range of issues.

For nearly two decades as president, Paul charted the best path forward for funds, their managers, their directors, and the shareholders they serve with great vision, energy, and impact. Our industry—and the opportunities that we offer investors—are stronger today than ever before, thanks to his efforts.

Fortunately, we have found a worthy successor. On November 9, Eric J. Pan—a veteran markets regulator with deep experience in international financial regulation and a recognized scholar and expert on financial regulation—became the 10th executive to head the Institute in its 80-year history.

Eric brings global experience, deep financial and regulatory insight, and a strong commitment to investor protection and service. He has directed international regulatory policy at both major US capital markets regulators, the Securities and Exchange Commission (2011–2015) and the Commodity Futures Trading Commission (2015–2019). He has written and spoken extensively on issues that matter greatly to ICI and its members, including international coordination of financial regulation and corporate governance.

The Board is confident that Eric will continue to build upon ICI’s great strengths as he leads our industry to navigate the new challenges and opportunities ahead.

The unending challenges of 2020 tested our industry—but they gave us the chance to demonstrate our outstanding strengths in service of hundreds of millions of investors worldwide. With great hope, we look forward to the future.

George C. W. Gatch
Chairman, Investment Company Institute

Significant Steps to Foster Diversity and Inclusion in the Fund Industry

Fostering greater diversity and inclusion is critical to the future of the fund industry. ICI’s Board of Governors took significant steps in fiscal year 2020 to advance the Institute’s commitment and work toward that goal.

In January, the board directed the creation of a board-level Diversity and Inclusion Working Group to recommend measures that could advance diversity and inclusion. The working group responded with proposals to launch and publish ongoing surveys to measure the demographics of the industry’s workforce and of fund boards. The group also proposed pipeline initiatives designed to bring more women and members of racial and ethnic minority groups into legal and investment management careers in the industry.

At its October meeting, the Board passed a resolution formally endorsing the working group’s recommendations. The resolution directed the Institute to engage a firm with expertise in workforce issues to conduct a survey about the representation of women and members of racial and ethnic minority groups in management companies throughout the industry. The board resolution urges ICI members to participate in the survey and calls for ICI to report aggregated results. The report will provide more comprehensive data on the fund industry’s demographics and enable ICI and its members to develop targeted initiatives to foster an industry that incorporates, recognizes, and elevates people of all backgrounds, races, and cultures. A separate survey by ICI and the Independent Directors Council will report on the gender, racial, and ethnic makeup of fund boards.

The board resolution also supported two pipeline initiatives. It endorsed a five-year extension of the ICI Education Foundation’s commitment to help fund the Robert Toigo Foundation in their important efforts to advance the careers and leadership of underrepresented talent in financial services. And it directed ICI to develop a program that will expose more minority law students to the asset management industry, including the various legal and compliance positions available in the field.

In a separate action, the Board created the Diversity and Inclusion Committee, by elevating a membership-based working group on diversity issues to the status of standing committee. Crystal Hardie Langston, chief diversity officer of Vanguard Group, has been nominated as the committee’s first chair.

As ICI Governor Mellody Hobson, co-CEO and president of Ariel Investments, noted in a press statement, “These initiatives are the first few steps in a longer journey toward having a truly diverse and inclusive asset management industry, at all levels of seniority.” The Board’s direction will help leadership from across the industry work together to take action and make meaningful progress in this area in the years to come.

A Conversation with Paul Schott Stevens

Paul Schott Stevens, ICI’s longest serving chief executive, is retiring at the end of 2020. As he neared the end of his 16 years of service, he sat down with ICI staff to discuss the events of his tenure.

A Legacy of Service

A Legacy of Service

A timeline of Paul Schott Stevens’s service to ICI.

Paul Schott Stevens has steered ICI for 16 years through unprecedented growth and regulatory change, and through some of the most challenging years in ICI history.

Read More

Paul Schott Stevens as ICI President and CEO
By the Numbers

Paul by The Numbers

Eric J. Pan Elected as ICI’s Next President and CEO

Eric J. Pan

Eric J. Pan, a veteran capital markets regulator with deep experience in international financial regulation and a recognized scholar and expert on financial regulation, took on November 9, 2020, as president and CEO, the 10th chief executive of ICI and its predecessor organizations.

The Board of Governors unanimously elected Pan on October 8, on the recommendation of a search committee composed of seven members of the Board’s Executive Committee and led by ICI Chair George C. W. Gatch. As president and CEO, Pan will direct ICI’s staff of 174 in offices in Washington, DC; London; and Hong Kong.

“I am honored to join ICI as its next president and chief executive,” Pan said. “A regulated investment fund industry is essential to successful capital markets. As the leading voice for investment funds for 80 years, ICI is dedicated to ensuring funds continue to play this vital role in the United States and abroad. I look forward to working with ICI’s members and top-flight staff to continue the good work of Paul Schott Stevens by speaking out about why funds are important, how they serve investors, and why they play a critical role in the financial system.”

A graduate of Harvard College, the University of Edinburgh, and Harvard Law School, Pan has made his mark both as a regulator and an academic.

He was recruited to the Securities and Exchange Commission (SEC) in 2011, charged with leading a new unit to oversee international regulatory policy and implement the agency’s response to the G20 Leaders’ agenda in the wake of the global financial crisis. In that role, he oversaw the SEC’s participation in the International Organization of Securities Commissions (IOSCO) and Financial Stability Board (FSB). In 2015, Pan moved to the Commodity Futures Trading Commission (CFTC), where as director of the Office of International Affairs he supervised all CFTC international initiatives. He represented the Commission in bilateral and multilateral negotiations as well as in IOSCO and the FSB, chairing the IOSCO Committee on Derivatives, the OTC Derivatives Regulators Group, and the FSB working group on data standards governance. He also assisted the CFTC chairman in leading the IOSCO Cyber Task Force and the IOSCO Task Force on Market Fragmentation.

From 2005 to 2010, Pan was director of the Heyman Center on Corporate Governance and associate professor of law at the Benjamin N. Cardozo School of Law, publishing research on financial regulation, international coordination, and corporate law. He returned briefly to academia in the fall of 2019, spending a semester as senior research fellow and adjunct associate professor at Columbia Law School and its Center for Law and Economics Studies. Pan began his career as an associate at Covington & Burling in Washington, DC.