SHAREHOLDER ENGAGEMENT ON THE INCREASE - BUT MORE TO BE DONE

The Investment Management Association (IMA) has today published its fifth Fund Managers' Engagement Survey, looking at how fund managers engage with the companies in which they invest. It is clear that, over the last five years, fund managers have increased their engagement and also become increasingly transparent.

The survey looks in detail at examples of seven particularly contentious issues between companies and shareholders, examining the degree of interaction that went on.  It found that, for example, 21 firms had a total of 59 separate meetings with the Royal Bank of Scotland about its rights issues in 2008.  Also in 2008, 14 firms had a total of 28 meetings with Bradford & Bingley, including 17 with the Chairman, about its financing.

Richard Saunders, Chief Executive of the Investment Management Association, said:

"The survey demonstrates a widespread commitment among fund managers to engagement and transparency, and to putting the framework in the Institutional Shareholders' Committee's Principles into practice.  It reveals for the first time the extent of the activity which goes on with individual companies, much of which takes place in private. 

However, it is also very apparent that corporate governance failings in banks, and the unwillingness of bank boards to engage with investors in scrutiny and challenge of strategy, were factors that contributed to the crisis.  There are lessons for both boards and investors from this experience, which is why we are now engaged with our ISC colleagues in a review of the framework."

A copy of the survey can be viewed here.

ENDS

Notes to Editors:

1. The Institutional Shareholders' Committee is made up of the Association of British Insurers, Association of Investment Companies, National Association of Pension Funds and Investment Management Association. Its Statement of Principles was first published in 2002 and last amended in 2007. It sets out best practice for institutional shareholders in relation to the UK companies in which they invest.

2. This is the fifth survey by IMA to measure its members' engagement with the companies in which they invest and covers the two years ended 30 June 2008, covering 32 firms which together manage 68% of all UK equities managed. It specifically looks at the firms' adherence to the Institutional Shareholders' Committee's Statement of Principles in relation to the companies in which they invest.

3. The key findings are that:

• all firms have policy statements on engagement and more firms (28) now make them public by putting them on their websites, with the remainder making them available to clients or on request;
• all firms vote their UK shares and do so in a considered way - taking different approaches to the same issues - this is not just a box ticking exercise;
• all firms report to their clients; and
• firms increasingly make their voting records public; this has gone up from two in 2003 to 24 in 2008.

4. About Investment Management Association (IMA)
IMA is the trade body for the UK's £3.4 trillion asset management industry. The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs. Its role is to represent the industry and promote high standards.

For further information, please contact:
Noreen Shah, Press Officer, IMA, 0207 831 0898
Mona Patel, Head of Communications, IMA, 07834 089332