Brunel’s Stewardship Policy

We recommend Brunel’s excellent stewardship policy as a model for institutional investors everywhere. Stewardship is defined as the job of taking care of something, such as a company or property. As investors, we use the term assets. Brunel is committed to responsible stewardship and seeks to contribute to the ‘care’ of all the assets under…

‘Quiet diplomacy’ the weapon of choice for passive funds | Financial Times

About a fifth of the freely traded shares of the US equity market are now owned by index-tracking funds and passive institutional mandates, according to S&P Dow Jones Indices. This underlines the vital role played by the three largest managers in this space — BlackRock, Vanguard and State Street — in policing corporate standards.Larry Fink,…

SSGA’s Kumar warns companies on ESG progress | Corporate Secretary

Rakhi Kumar, global head of asset stewardship and ESG with State Street Global Advisors (SSGA), has warned that her firm’s patience is running out with portfolio companies that aren’t heeding the asset manger’s warnings on topics such as board diversity, refreshment and climate change.‘Given that we started talking about some of these issues in 2011,…

Mutual Fund Transparency and Corporate Myopia

We often hear that corporate executives believe the pressure to issue quarterly figures and guidance leads to over-emphasis on short-term returns. A new paper by Vikas Agarwal (Georgia State University), Rahul Vashishtha (Duke University), and Mohan Venkatachalam (Duke University) provides some welcome focus on another source of short-term pressure, the reporting requirements imposed on mutual…

Asset managers accused of grandstanding on Persimmon pay | Portfolio Adviser

Asset managers who slammed Persimmon pay packages this AGM season have been silent when questioned over their voting record at the UK housebuilder, which enabled executive remuneration to soar.<P><P>At this year’s AGM, held in April, 48.5% of shareholder votes were cast against the pay report, which sees chief executive Jeff Fairburn receive a whopping £75m.<P><P>But…

How Long-Term Investors Influence Corporate Behavior

Annotated opening paragraphs of an article on the impact of long-term investors in the MITSloan journal: In his recent letter to CEOs, Larry Fink, CEO and chairman of the mutual fund giant BlackRock Inc., based in New York City, repeated his call for organizations to share their strategies for creating sustainable value. He also added…

BlackRock turns up the pressure on gun makers – Mar. 2, 2018

BlackRock, calling the issue of gun manufacture and sales one of “tremendous urgency,” is engaging with its portfolio companies: It said it has already had “constructive discussions” with some of the companies. It plans to ask gun makers how they’ll deal with the reputation and legal risks associated with manufacturing civilian firearms, and if they…

How are Shareholder Votes and Trades Related?

Rutgers Assistant Professor Sophia Zhengzi writes: Are shareholder votes a sufficient form of voice that catalyzes trades across the board? Are shareholders’ votes and trades correlated? And do shareholders update their trading patterns based on the information conveyed by other investors’ votes? We address these questions by examining the relation between votes and volume at…

At BlackRock, Vanguard and State Street, ‘Engagement’ Has Different Meanings – WSJ

Sarah Krause writes in the WSJ about large institutional investors’ differing views of “engagement,” noting that they also differ on their analysis of particular engagement/activism opportunities. The biggest passive money managers all like to use some version of the word “engage” when describing how they hold their portfolio companies accountable behind the scenes. They differ on…