Monday, 25 June 2007

Fund managers fight back on voting disclosure

The IMA, the trade body for fund managers, has had a pop at the TUC over the issue of voting disclosure. They did the same thing last year. There's quite a bit of spin here. Yes the number of fund managers disclosing some information publicly about how they vote has gone up but a) several of these just disclose headline stats and b) most disclose nothing at all.

News story from Thomson Investment Managemet News:

War of words breaks out between the IMA and TUC over manager voting

The investment management body has accused the TUC of 'promoting myths' in its latest annual fund manager survey.

LONDON (Thomson IM) - A war of words has broken out between the TUC and the IMA, with the latter accusing the TUC of "promoting myths" in its latest annual fund manager survey.

The TUC today said that the response for its fifth annual fund manager voting survey has been "disappointing", with just 45 pct of the target group providing some sort of information, compared with 61 pct last year.

However, Richard Saunders, chief executive of the Investment Management Association, said: "The TUC are promoting myths."

"The fact is that investment managers have become steadily more transparent over the last four years. Disclosure to clients is universal, and public disclosure is continuing to increase. The voluntary approach is working."

He added: "Our own annual survey into fund managers engagement, due to be published shortly, shows that, in 2006, 16 fund managers holding over 340 bln stg worth of shares in UK companies made details of how they voted public by putting them on their website - an increase of over 100 pct from two years ago."

Unveiling its fund manager voting survey earlier today, the TUC said this is the second consecutive year that the response rate has fallen, and the organisation stated that the results were somewhat surprising, given that it is the first survey to take place since the Companies Act gave the government reserve powers to force investors to reveal how they vote their shares.

Kay Carberry, assistant general secretary at the TUC, today told pension trustees that the case for the government to use these reserve powers would be "overwhelming", if fund managers continue to fail to provide information on how they vote.

The TUC said it will now lobby the government to use its reserve powers and introduce mandatory disclosure of voting records, in the absence of a significant increase in disclosure from fund managers.

The survey found that, while last year 34 investment organisations provided full or partial responses with 19 not responding, this year it received full or partial responses from only 25 organisations, with 30 failing to respond.

The response rate has been consistently falling - it was just 45 pct this year compared to 61 pct last year and 68 pct in 2005.

Six of the responses were a direct result of pressure from trustees who are members of the TUC's member nominated trustee network, it said.

"Looking ahead, it will be interesting to see whether - in the light of increasing awareness of corporate governance and the potential for pension fund representatives to influence corporate behaviour, more pension funds retain voting rights in the future, rather than relying on investment institutions to exercise rights on their behalf," the TUC said.

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