Investor engagement leaves 'room for improvement'

Investor engagement leaves 'room for improvement'

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UK investment managers, life companies and pension funds are committed to engagement, but that there is still room for improvement, according to the Investment Association's latest report.

Managers showed improvement through increased dedication of resources to engagement. Respondents reported that the human resource dedicated to engagement by 19% in the year to 30 September 2014. 

Over 80% of this increased resource is represented by portfolio managers and analysts - indicating a welcome increase in the integration of stewardship into the investment process.

"It is encouraging to see that firms are devoting greater portfolio manager and analyst resource to engagement, illustrating that stewardship is moving to the heart of the investment process."

"Investor engagement can help ensure long-term and sustainable strategies at companies and deliver good long-term returns to our clients and end beneficiaries," said Liz Murrall, Director of Stewardship & Reporting.

Almost all (90%) of respondents were satisfied with the outcome of their engagement with the companies in which they invest and reported companies' responsiveness and openness to dialogue, alongside their ability to effect change.

However, the Investment Association noted that it takes time to establish an engagement culture. Asset managers increasingly have global portfolios and, although there is more engagement with overseas equities, there is less with other asset classes.

The report also shows a drop in the number of mandates referring to stewardship and a drop in the number of respondents notifying companies in advance of voting against or abstentions. The latter is unfortunate as respondents indicated that direct contact and one-to-one meetings are the most effective ways of engaging with investee companies.

Most of the focus is also still on remuneration, also investors are branching out, reporting that corporate performance, culture and strategy and board leadership were also important.

The report also shows that collective engagement is vital in certain circumstances, in order to attain critical mass, allow smaller investors access to companies and effect change. 


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