New stewardship tool set to disrupt pooled funds landscape
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Several industry players have partnered up and developed a pooled funds service that lets pension schemes actively engage in stewardship.
The new service is being announced in the wake of the Department for Work and Pensions launching a taskforce on pension scheme voting, and of new rules requiring trustees to report on stewardship.
The new service is being announced in the wake of the Department for Work and Pensions launching a taskforce on pension scheme voting, and of new rules requiring trustees to report on stewardship.
Institutional platform the Asset Management Exchange – a Willis Towers Watson service – and asset manager DWS, working in partnership with Northern Trust and Minerva Analytics, whose chief executive is also vice-chair of the taskforce, have created the new solution.
Willis Towers Watson said the service aggregates investor stewardship preferences and seeks to execute votes in alignment with their expressions of wish. Where aggregate investor preferences conflict within a pooled fund, voting instructions can be split, it added.
Voting in pooled funds has recently become an issue of debate as the new regulations require increased stewardship reporting, but many schemes are not given the option to exercise their own vote in pooled arrangements, instead having to accept the manager's choice.
The Association of Member Nominated Trustees has been campaigning in favour of pooled fund voting for eight years. In December, the DWP launched a Taskforce on Pension Scheme Voting Implementation to tackle the issue and potentially require pooled fund managers to accept split voting.
The Association of Member Nominated Trustees has been campaigning in favour of pooled fund voting for eight years. In December, the DWP launched a Taskforce on Pension Scheme Voting Implementation to tackle the issue and potentially require pooled fund managers to accept split voting.
Pensions minister Guy Opperman said about the announcement: “This will tackle, head-on, the industry practice of ‘invest in my fund, accept my voting policy’."
He added: “I strongly hope this prompts other pension scheme trustees to challenge their fund managers about plans to offer this service and drives engagement with other key issues such as how their managers are engaging and voting on pressing issues such as climate change.”
He added: “I strongly hope this prompts other pension scheme trustees to challenge their fund managers about plans to offer this service and drives engagement with other key issues such as how their managers are engaging and voting on pressing issues such as climate change.”
Simon Howard, who chairs the TPSVI, said: “Voting is a key tool which allows pension funds to better meet their broader stewardship obligations, but pension funds have faced difficulties in getting their wishes reflected in the votes cast in their name. This makes no sense – none of the problems are insuperable."
AMNT co-chair Janice Turner said the association is delighted that AMNT's Red Line Voting policies are included in the options AMX clients can choose
"We anticipate that this product launch will fuel the innovation that is desperately needed within the financial services industry to change their business models and products to better accommodate client voting preferences," she said.
Christopher Head, head of business development at AMX, called the introduction of the service "a paradigm shift which will begin the transition of voting power from investment managers to the rightful institutional asset owners”.
