While the use of sub-advisers offers many potential benefits for fund advisers and fund shareholders, overseeing their funds' use of sub-advisers poses a number of unique challenges for fund directors. Though a board's duties with respect to the oversight of sub-advisers are similar to the oversight of a fund's investment adviser, practical considerations can make the board's responsibilities more challenging to fulfill. In the words of the report:
[T]he 1940 Act treatment of sub-advisory relationships is no more complex than the treatment of the relationship between a fund and its primary adviser. However, because hiring a sub-adviser brings a new party into the set of relationships overseen by fund directors, it raises different issues for directors and has the potential to make their oversight more challenging. In order to guide directors through the issues they are likely to encounter when overseeing sub-advisory relationships, the Forum has developed the following practical guidance.
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