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Coronavirus Round-up: Pandemic is a “philosophical test” for asset managers

The latest COVID-19 / investment developments

The crisis is a “philosophical test” of whether asset managers are true long-term investors, as well as a practical test of how they can support otherwise healthy and viable businesses, according to Schroders’ CEO Peter Harrison. “It is the role of investment managers to allocate capital to companies with long-term, sustainable business models,” he wrote in the Financial Times, adding the industry should be holding “honest and open” conversations with company management teams. He concludes: “Long-termism must win out.”

UKSIF, the UK’s sustainable investment forum, is holding a webinar on the outbreak on March 26 at 2pm London time. “This is the first crisis when responsible investment has been hard-wired into the financial system, and we need to make sure this is the first time our issues are central to the response,” said CEO Simon Howard.

Proxy advisory firm Glass Lewis has updated its guidelines on AGMs in the light of the outbreak, saying that it does not believe that discouraging virtual-only meetings during this time “serves the interests of shareholders or companies”. The post was made by Aaron Bertinetti, Senior Vice President of Research and Engagement. The firm would take into account the extenuating circumstance of the pandemic when applying its policy on virtual-only shareholder meetings. “We will review these on a case-by-case basis and will also note whether companies state their intention to resume holding in-person or hybrid meetings under normal circumstances.”

Two think tanks, the Institute of Public Policy Research (IPPR) and Common Wealth, are calling for any airline bailout to include strong conditions for workers and the public. They said analysis shows that two major airlines have paid out dividends in excess of £2.6 billion since 2014, while the sector is underpaying corporation tax. They argue that any bailout of the sector must be contingent on ensuring job security, action on climate change, and a public ownership stake.

The Pensions Regulator (TPR), which oversees the UK's workplace schemes, says it will “maintain a proportionate and fair approach to any action we may take” if there are administrative breaches of the law during the outbreak. If trustees or administrators believe they will be unable to pay members’ benefits, they are to report to the TPR immediately. The body also said it was suspending all regulatory activities.

Calvert Research & Management, the $21bn US responsible investment house that’s part of Eaton Vance, has added new wording to fund prospectuses. “The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could negatively affect the worldwide economy, as well as the economies of individual countries, individual companies and the market in general in significant and unforeseen ways. Any such impact could adversely affect the Fund’s performance, or the performance of the securities in which the Fund invests and may lead to losses on your investment in the Fund.”

The more than 12m participants in Malaysia’s MYR924.75bn (€191bn) Employees Provident Fund will be able to draw down a maximum of MYR 500 each month from their accounts amid the crisis, according to a Pensions & Investment report citing Prime Minister Muhyiddin Yassin.

The New York State Common fund can weather the current market volatility, according to State Comptroller Thomas DiNapoli. P&I quoted him as saying the $225.9bn fund was “actively managing through these difficult times”. He added the system was “well-funded".