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IMA head urges shareholder activism

The asset management industry should use its power to hold companies to account on behalf of shareholders, the chairman of the Investment Management Association (IMA) argued yesterday.

In a speech to the CFA Society, Robert Jenkins said the “investment community” had played a part in the credit crunch “more than we care to admit. This is by not only by buying flawed derivatives from banks but also by failing to hold their boards to account.

“I would encourage active managers who hold the shares to engage. And I would encourage all shareholders who engage to vote down directors of companies they judge to be poorly run. Hold them accountable. Who else will?” he asked.

Although it is asset managers’ responsibility to maximise returns for clients, company boards should fear consequences if they do not listen to those who represent the companies’ owners, said Jenkins. “Surely [this] must be a good thing for our industry and industry more generally.”

Noting that much shareholder activism takes place behind closed doors, he added it still appeared ineffective.

“A number of prominent money managers testified to the House of Commons Treasury Select Committee that they had demanded the resignation of certain bank directors well over a year ago. These revelations attracted two types of observations: many commentators applauded the previously undisclosed attempts made by institutional managers. Others by contrast bemoaned the impotence of an industry that was ignored.”

While active managers may “vote with their feet” by simply selling a company whose board they are unhappy with, passive investors are sometimes obliged to hold shares in a company and can use this as an opportunity for engagement with boards, he added.


People on the move: Investment

FourWinds Capital Management, the alternative investment manager, has appointed of Lydia Whyatt as managing director in the environment group. Prior to joining the firm, Whyatt spent four years as managing director at Foursome Investments. In her new role, she will focus on deal execution and implementation and will be based in the London office.

National history

Peter Hargreaves is an early riser. I know this because as I was motoring up to London last week, his dulcet tones could be heard on BBC Radio 5 at about 6am complaining about the Government’s 50 per cent tax plans for earnings over £150,000.

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Tenet and the Financial Services Skills Council are launching two apprenticeship programmes for mortgage and investment advisers to help bring new blood into the industry.

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According to our recent report on the death of retirement, changes in workplace pension provision mean that coming generations of retirees could have a radically different experience of retirement from their parents. The average contribution rate into an old-style final salary pension was around 20% of total wages, the statutory minimum for a new automatic […]


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