Hard core of fund managers keep votes secret

A hard core of investment fund managers still refuse to reveal how they voted at company AGMs and unless this changes soon, the Government must use its reserve power to force fund managers to disclose their voting records in a standard form, says a new TUC report.

Fewer than half the funds surveyed (23 out of 49) responded to the TUC's sixth annual survey of fund manager voting, published to coincide with Taking the Long View - the TUC Member Trustee conference 2008. The 45 per cent response rate is similar to last year, but considerably less than in previous years - 68 per cent responded in 2005. Before the TUC started its survey only the Co-operative Insurance Society published its voting record.

This secrecy defies both the Government, which took a reserve power in the most recent Companies Act to enforce disclosure, and the Institutional Shareholders Committee which says that 'public disclosure is generally desirable' and expects fund managers to 'comply or explain' with voluntary disclosure.

The survey reports some progress, with Baillie Gifford, Aberdeen Asset Management and Legal & General making comprehensive disclosures for the first time in the last year. But during the period under review, there was at least one resolution on political party donations and some fund managers refuse to say even how they voted on such an issue of public interest.

Further findings from the fund manager voting survey include: Only 18 fund managers provided responses on both sections of the survey - on voting records and policies and processes. A further three organisations provided voting records only, taking the total this year to 21. This compares to 25 last year, 26 in 2006, and 28 in 2005. A further two organisations provided responses on policies and processes only, bringing the total number this year to 20.Around three quarters of survey respondents now make some voting data publicly available. Half of the fund managers responding to the survey supported at least 80 per cent of the remuneration resolutions on which voting decision were sought. The majority of investment managers who responded are signatories to the United Nations Principles of Responsible Investment.

TUC General Secretary Brendan Barber said: 'There is now a hard core of fund managers who continue to keep their votes secret, despite pressure from the Government, consumer groups and even their own trade bodies. They should remember that this is not their own money, but that of ordinary pension scheme members and other savers.

'Even those companies that do disclose do so in different ways, making it hard to compare voting records. It is much easier to do this in the USA where there is mandatory disclosure.

'The voluntary approach has achieved some progress, but not enough. Unless the laggards get on board fast, the Government will need to use its reserve power and make disclosure compulsory.'