UK - The National Association of Pension Funds has welcomed the current trend by fund managers to appoint engagement specialists.
Fidelity Investments has appointed Trelawny Williams to assist companies in enhancing corporate governance standards and Morley Fund Management revealed it is set to appoint a senior fund manager to take on an identical role.
The NAPF is keen to promote the importance of shareholder engagement and trustees are coming under increased pressure to improve levels of activism in the wake of the Myners review which highlighted the issue.
High-profile examples of poorly-managed firms, such as the Enron collapse, has further highlighted the importance of shareholder engagement.
NAPF investment manager David Gould said: “The thrust of Myners is to encourage engagement with companies whose performance is below optimum.
“The employment of specialists to engage with the management of companies it invests in is one way of doing this. Any improvement in engagement is something to be encouraged.”
Morley Fund Management said the role had historically been carried out by individual fund managers, but since Myners highlighted such a role’s importance a specific appointment is now required.
Proxy voting and corporate governance specialist Manifest also welcomed the trend. Managing director Sarah Wilson said: “A specialist on engagement ensures the company delivers the policy on a consistent basis and works with the fund managers.”
However, Clerical Medical Investment Management has opted for a more team-based approach. Director of UK equities William Claxton-Smith said: “We don’t see this as something that is done by a specialist team, but by the whole team. We think governance and activism is not a specialist area, but an integrated part of the investment process. We want all of our fund managers and analysts to be taking an interest in this area.”
Experts have warned that fund management houses should not merely pay lip-service to engagement in a bid to assure clients that the investment manager encourages good corporate governance.
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