UK - The Trades Union Congress (TUC) Superannuation Society, the pension fund for employees of the Trades Union Congress, has added extra financial issues as selection criteria in its next fund management review.
The society announced the new selection criteria along with its decision to join the Enhanced Analytics Initiative – the consortium of asset managers and pension funds which promotes better research of extra-financial issues – as an associate member.
“There is a growing recognition amongst pension funds and fund managers that the management of extra financial or tangible issues by companies is essential for their long-term performance,” said Kay Carberry, TUC assistant general secretary and director of the TUC Superannuation Society.
“A company’s ability to sustain and create value over time is inextricably linked to a host of intangible factors. As a trade union body we are clearly concerned with human capital issues, but more broadly these intangibles can be anything from brand management to environmental impact.”
As part of the move, the fund will be encouraging its fund managers to join the EAI and allocate a minimum of 5% of their broker commissions to those brokers who, through their research, best analyse the material extra-financial and intangible issues that can affect a company’s or a sector’s performance.
Commenting on the new member, Philippe Lespinard, lead director of EAI and CIO of BNP Paribas Asset Management, said: “At a time when alpha generation is proving to be challenging, and clients are focussing on absolute risks and returns, this kind of differentiated sell-side research can only help fund managers make more informed decisions to enhance the long-term value of their clients’ investments.”
Associate members of EAI are asset owners who do not have direct relationships with brokers, but want to encourage their fund managers to join EAI.
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