Lothian Pension Fund appoints Northern Trust for proxy support
The £8bn Lothian Pension Fund (LPF) has appointed custodian Northern Trust as the provider of an automated proxy support service.
The facility will allow the Scottish Local Government Pension Scheme (LGPS) fund to vote its full shareholding at the AGM of every company held by the fund by initiating the return of loan positions automatically triggered by meeting announcements.
The 85,000-member fund said that while the stock lending recall service would cause some reduction in stock lending income, being able to vote the entire shareholding "takes precedence".
LPF chief investment officer Bruce Miller said: "Stock lending is a key part of an efficient market. We believe in long-term investing, and the lending of stocks doesn't impact on the long-term returns of the portfolio.
"Stock lending also generates significant fee income for LPF, providing a boost to the long-term performance of the fund."
He said the fund was committed to voting at the AGM for every company it holds, and that it has become more active on voting over the last few years, particularly on climate issues.
"We must make every effort to have the greatest impact we can in votes that we believe in. Ensuring the efficient and timely return of stock in the lending programme allows us to have the biggest impact on behalf of our members."
Chief executive Doug Heron added: "As a responsible investor, it's vital that we use our votes to make the maximum impact we can on behalf of our stakeholders. If this means sacrificing fee income because it's the right thing to do, then we'll do that.
"This is a progressive move by the investment team at LPF, but we believe that it will set the standard for management of stock lending going forward."
Northern Trust EMEA head of securities lending Mark Jones concluded: "The solution we have implemented with LPF closely supports [the fund's] objectives within a securities lending programme that remains focused on delivering sustainable, long-term returns for members."
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