LGIM has become one of the first UK-based asset managers to offer pass-through voting to its clients, signing an agreement with stewardship and voting fintech Tumelo to allow clients to put their own voting policy in place in pooled funds.
The firm had previously offered its clients the ability to put in place an “expression of wish”, allowing them to communicate preferences in a non-binding manner, but clients will now be able to put their own voting policy in place for pooled funds.
The service is being trialled with the £2 billion ($2.4 billion; €2.3 billion) Camden LGPS scheme, which will now apply its bespoke voting policy, provided by proxy adviser PIRC, across all its investments.
Expected to be available in early 2024, all of LGIM’s DB and DC clients will be able to use the service in its UK pooled equity index funds. The LGIM offering will allow clients to put in place their own custom voting policy.
While it claims to be the first UK manager to offer this service, LGIM joins a number of large US and European asset managers that allow clients to direct their votes.
DWS and Northern Trust partnered with AMX and Minerva Analytics to launch a service in 2021 and both BlackRock and State Street have given clients the ability to vote their shares in some pooled funds, although the practice is not widespread. As of 30 June this year, $586 billion of BlackRock’s client assets had signed up to the service.
Rishi Madlani, chair of the pension committee at Camden pension fund, said that the fund had always been forced to accept manager policies in its pooled funds.
“This has led to misalignment of voting across our portfolio and sometimes with our own responsible investment beliefs,” he said, adding that the fund will now have “one strong voice” on issues such as remuneration and climate change. He said he hoped the decision would inspire other LGPS funds to use pass-through voting.
Alan MacDougall, managing director of PIRC, said the move showed “there are no longer any barriers to asset owners who want to vote their own way”. Managers have previously cited regulatory and technical barriers, as well as the impact on their own stewardship efforts if they do not control voting.
The move comes amid UK asset owners’ growing dissatisfaction with the voting policies of their asset managers. One group of UK asset owners has commissioned academic Andreas Hoepner to conduct a review of asset manager voting and stewardship at oil and gas companies.
The group revealed more details of its review on Friday. The research will compare voting patterns between asset owners and managers at a number of oil and gas companies, as well as comparing stewardship intentions set out in reporting and actual voting patterns. Glass Lewis will also take part, with results presented on 12 October.