Friday, 9 March 2007

Fund managers move on voting disclosure, or do they?

The voting disclosure element of yesterday's speech by Ed Balls has received a bit of coverage today. Basically the Institutional Shareholders Committee (which brings together all the big investor trade bodies) has agreed to draft a set of principles for disclosure of voting records beased on the UK's favourite 'comply or explain' approach.

The spin this development has been given is quiet interesting. For example the Financial Times suggests that the industry has been forced to move. The snippet in yesterday's Times took a similar tone.

But I wonder how far this is true. I remember the fact that the ISC was going to draft a set of principles being publicly talked about at the NAPF Investment Conference last year. And rumour has it a draft of the framework was circulating well before Xmas. Now we hear that the principles should be ready by the summer. That's the best part of 18 months. If anything the industry has done a sterling job of delaying the inevitable as long as possible.

By the way, the report in today's Guardian includes some dodgy arguments:

City sources point out there has already been progress as 16 of the major managers already publish their voting records on their websites. However, it is thought the pages are not attracting many hits.

First, there is no way that 16 managers disclose information that is actually useful. I would imagine that number includes some fund managers that simply disclose a statistical breakdown. Secondly there are a couple of reasons why their disclosures don't get much traffic. One is that several of those managers which do disclose bury the info in an obscure place on their website and/or disclose in a way that makes it very hard for the un-geeky to read. Another is that one manager's disclosure on its own is hard to make sense of.

When people want to compare the investment performance of fund managers they don't expect to have to hunt around the websites of individual fund managers and pull the information together for themselves. They know they can rely on an adviser, or maybe a personal finance mag, to give them comparable data. Ultimately they should be able to expect the same kind of info in relationship to the 'ownership' bit of what fund managers do.

At the moment we have a situation comparable to fund managers deciding whether or not they will disclose performance data to potential clients. A 'comply or explain ' regime under the ISC principles will do nothing to alter this. Some fund managers will no doubt want to 'explain' that potential clients can't have data.

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