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Sarah Wilson, Minerva

New tool aids pooled fund stewardship voting engagement

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The Asset Management Exchange (AMX), part of the Willis Towers Watson group, and asset managers DWS have launched a new pooled fund investment solution, the AMX- Investor Stewardship Service, in partnership with Minerva Analytics, utilising its vote tech solution, VotePlus.

The Asset Management Exchange (AMX), part of the Willis Towers Watson group, and asset managers DWS have launched a new pooled fund investment solution, the AMX- Investor Stewardship Service, in partnership with Minerva Analytics, utilising its vote tech solution, VotePlus.

Sarah Wilson (pictured) of Minerva Analytics, the independent proxy voting agency partly owned by index-provider Solactive, explains that the new solution is designed to accelerate sustainable stewardship, and works for indices and pooled or comingled funds typically used by many institutional investors, including UK pension funds.

“It’s well recognised in the funds industry that regulations are changing rapidly and what was historically enough for ESG and stewardship has to adapt to meet client expectations,” she says.

“For a very long time there has been an impression that voting didn’t matter and seemed to be just a box ticking exercise.”

Wilson believes that the rapid growth of the ESG investment movement has made fund managers realise that people buying these funds have preferences on how to get maximum impact for that investment.

“If you buy a fund aligning with sustainable development goals, that alone is not good enough unless the governance of the company helps it achieve that potential.”

Currently, institutional asset owners have strict voting policies and have to report and take soundings from their members, or have developed their own policies, working in partnership with asset managers on stewardship.

“We have taken the hard work out by reconciling between the front end and back end. We do the heavy lifting with the fund administrators.”

The product is currently institutional only, with DWS observing that more institutions are considering pooled funds to get exposure to different strategies but had concerns on the stewardship issues within pooled funds, where investments from different investors are comingled to achieve economies of scale. 

“It was something of a light bulb moment,” Wilson says. “We are focusing on asset managers who have institutional exposure because the logistics of retail are more challenging with administrative hurdles to overcome.”

Under the Shareholder Rights Directive II, there are additional requirements for institutional investors and asset managers to publish an engagement policy which, Wilson says, has taken the world of pooled fund investments by surprise. “An ESG label on your pooled fund is only the start of the job,” she says.

The new service is being rolled out through the three parties at the moment. “It’s not quite the first Tesla rolling off the production line but it’s very much a groundbreaking concept at the moment,” Wilson says.

“For years pooled funds have thought about ESG as negative screening, which was historically the way it was achieved – but not anymore as now you need to look at sustainable development goals. If ESG matters, then surely all of your assets should have ESG considerations applied to them. This is what the next generation of investors want and expect to see.”

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