UK - UK fund managers say they have shirked off much of the impact of the Enron collapse, and claimed the UK is not suffering from the nervousness currently affecting the US markets.
But managers admit the scandal involving the US energy company has raised the profile of corporate governance issues, with several firms reassessing the relative activeness of their role as shareholders. Reforms are already planned in both the UK and the US which will alter the responsibilities of nonexecutive directors and shareholders.
But critics of the current system say that the internal management of firms has long been overlooked as a factor in shareholder value.
Friends Ivory & Sime director of corporate governance Richard Singleton warned that there was a proportion of UK fund managers who still did not exercise their full responsibilities as shareholders.
He said: “There are some fund managers who believe that they do not have responsibilities, because potentially in the next 10 minutes they might not be shareholders anymore.”
The Investment Management Association – formerly the Fund Managers Association – has urged caution about legislating on activism.
IMA chief executive Dick Saunders warned that any legislation would be a recipe for litigation against both fund managers and pension fund trustees.
Aegon Asset Management head of US equities Elaine Crichton reported a widespread disillusionment with corporate management in the US – a reaction she thought over stated – with US analysts are partly to blame.
Communication between equity and bond analysts in the US has been poor before the Enron collapse and this was only now being rectified, Crichton said.
In the UK there exists much more of a collaborative culture, with analysts having more regular meetings to exchange information on the value of companies, Crichton said.
She said: “There is still a bit of nervousness about, but domestic investors are not scare-mongering the way Americans are.”
By David Rowley
PTL has appointed Karein Davie as a client director in its Birmingham office.
The level of interest rate hedging increased to £29.5bn of liabilities in the second quarter as pension funds continued to de-risk, according to BMO Global Asset Management's research.
UK inflation has risen for the first time since November to 2.5% in July, up from 2.4% in June, thanks to rising fuel costs and the price of computer games.
The number of DB pension scheme trustees targeting a buyout with an insurer has increased significantly in the past five years, latest research from Willis Towers Watson shows.