For immediate release Wednesday 21 June 2006

“CULTURE OF SECRECY” MYTH “EXPLODED” BY IMA

Third annual survey of fund manager engagement with companies

This survey, published by IMA today, demonstrates:

• Near universal compliance with the industry’s Statement of Principles on shareholder engagement¹
• Increasing transparency about voting policy with more firms making publicly available detailed policy statements
• Overwhelmingly, firms report details of their voting and other engagement to the clients whose ownership rights they exercise
• Increasing voluntary publication on web sites of voting at company general meetings
   
  The survey covers 35 fund managers, representing 62% of UK equities managed in the UK. 

Policy statements:  27 managers had made their policy statements on engagement public, compared to 21 in 2004 and 14 in 2003, with more planning to do so.  This year’s policy statements also cover more issues and are more detailed.

Reporting to clients:  all 35 managers bar one report quarterly to their clients on their engagement and how they have voted; the one that does not makes its voting records public by putting them on its website.  The majority (23) of the managers reviewed their reporting arrangements in 2005, which in 19 instances resulted in changes.   

Public reporting:  more managers are making their voting records public by putting them on their websites.  10 managers did so as at 30 June 2005, compared to 7 in 2004 and 2 in 2003.  Since the survey date, one more manager has started publishing its voting records and another announced that it would be doing so shortly.  Interestingly, an analysis of the voting details published showed a wide variation in the matters reported indicating the complexity of this matter and the difficulty of introducing regulations requiring uniform disclosure.

Resources: there has been a marked increase in resources devoted to this area. As at end June 2005 the 35 managers employed over 200 people working full time on engagement, an increase of more than 20% in 2 years.  The 28 managers that provided details cast over 200,000 votes at over 600 AGMs in the year to end June 2005.

Richard Saunders, Chief Executive of the IMA, commented:

“This survey explodes the TUC’s myth of a ‘culture of secrecy’ in the asset management industry.  Managers are following industry best practice guidance and becoming ever more transparent, both to clients, and in some cases publicly.

“The survey also exposes the bankruptcy of the Government’s attempts in the Company Law Reform Bill to impose a one-size-fits-all public disclosure of voting.  The industry is evolving its own solutions without bureaucratic regulation.  The Government should heed the House of Lords and forget about this retrograde idea.

The Government’s threat to legislate has already imposed planning blight, with some managers having told us that they have put on hold any plans to disclose their voting publicly because of the prospect of statutory requirements.”

A copy of IMA’s “Survey of fund managers’ engagement with companies” year ended 30 June 2005 is attached.

-Ends-

Notes to editors:
1. The Statement of Principles is a comprehensive statement of best practice governing the responsibilities of institutional shareholders and investment managers in relation to the companies in which they invest. It was published in 2002 by the Institutional Shareholders’ Committee (ISC) which consists of representatives from the Association of British Insurers (ABI), Association of Investment Trust Companies (AITC), Investment Management Association (IMA) and National Association of Pension Funds (NAPF).

2. Previous surveys by IMA covered the years ended 30 June 2003 and 30 June 2004. Copies are available here.

3. The Company Law Reform Bill, as introduced in the House of Lords, contained  an order-making power for the Treasury to make regulations requiring institutional investors to publish how they exercised voting rights attached to shares in which they have an interest and to prescribe the form of such reporting.  The House of Lords voted on 23 May to remove the relevant Clause.  The Government have, however indicated that they intend to reintroduce the Clause in the Bill, which is now at Committee Stage in the House of Commons.

For further information, please contact:
Helen Stephenson, Communications Officer, IMA, 020 7831 0898

Out of hours contact:
Mona Patel, Head of Communications, IMA, 07834 089332