UK Stewardship Code signatories double but hedgies stay away

Wellcome Trust among six new asset owners to back code

The number of declarations of commitment from asset management firms, asset owners and service providers for the UK’s new Stewardship Code has almost doubled since October last year.

There are now 134 statements of commitment to the comply-or-explain measure on the Financial Reporting Council’s website – up from an initial 68 when the watchdog first unveiled responses.

There are now 18 asset owners on the list – up from the starting 12. They include the Wellcome Trust, the £14.5bn (€17.2bn) medical charity.

Other new asset owners are insurer NFU Mutual and the North East Scotland Pension Fund and investment trusts Alliance Trust, Hansa Trust and RIT Capital Partners.

Not all are willing signatories. Hansa chairman Alex Hammond-Chambers called it “one more piece of red tape for your board to deal with” in his statement to shareholders in November.

Asset management signatories now number 106, up from 48. Service providers have risen to 10 from eight, boosted by the addition of investment consultants Aon Hewitt and Hymans Robertson.

Again, not all consultants are buying into the Code. Cambridge Associates, for example, says it’s “not relevant” as it doesn’t trade or provide advice on individual equities.

P-Solve, the investment consultancy and asset management business with more than £2bn under fiduciary management, says the Code is not relevant as it invests via collective investment schemes.
There are a number of firms that have committed to the Code who aren’t yet on the FRC’s list, such asClimate Change Capital and the Pension Insurance Corporation.

The Financial Services Authority amended its rules on December 6, requiring all managers of institutional money to publish against the Code.

The FRC has spoken of a “critical mass” of investors getting behind the code, but significant overseas investors such as Dutch giants ABP and PGGM and the Norwegian Government Pension Fund remain absent from the list. There are still no sovereign wealth funds.

Hedge funds were another target group. But leading industry names like Marshall Wace, King Street Capital and Eton Park International have all declared it is not relevant for them.

The latter says that while it supports the Code’s objectives, it does not consider it appropriate to commit to a particular voluntary code of practice relating to a “specific jurisdiction”. Man Group, the world’s largest listed hedge fund group, is not on the FRC list.

Alpha Finance Advisors, a boutique analysis and portfolio construction firm argues that the publication of voting records could introduce significant conflicts of interest for fund managers.

Brian Cheffins of the University of Cambridge and the European Corporate Governance Institute argued in the Stewardship Code’s Achilles’ Heel late last year that the Code was “unlikely to foster substantially greater shareholder involvement in UK corporate governance”.

If you wish to publicise your commitment to the Stewardship Code, feel free to contact Responsible Investor.