ESG
Sustainable Finance Disclosure Regulations (SFDR)
The technical rules (or delegated regulations, in the lingo) are out, and there is a mountain of work for European fund managers who now have the exact content, methodology and presentation of information to be disclosed, “thereby improving its quality and comparability”, according to the European Commission who’s release can be found here, and some good reportage from Ignites Europe on what this means for those firms who aren’t willing to put in the hard yards can be read here.
Keep our bond fund brown!
It seems that not all investors are embracing the green wave washing over the investment fund world with the Financial Times (FT) reporting, here, that BlackRock will not go ahead with plans to switch a €1.4bn iShares corporate bond exchange traded fund to an environmental, social and governance (ESG) index, after a shareholder meeting to approve the change failed to reach quorum. The original proposal was apparently in response to increased investor demand, but clearly not enough demand yet!
Schroders: Making it personal
Listed investment manager, Schroder plc has linked its investment manager and analyst remuneration to sustainability goals, according to a report in Financial News here. The paper adds that the £700 billion investment firm is introducing “engagement objectives” for equity and fixed income money managers.
Financial Conduct Authority
2022-2025 strategy
Laid out over 32 pages here, the FCA’s (still relatively) new CEO Nikhil Rathi presents the financial regulator’s focus through 2025 – reducing and preventing serious harm, setting and resting higher standards and promoting competition and positive change.
Dear CEO Letter
Depositories, custodians and other fund services participants have a crucial role to play in good investment governance, a fact that is far less well-known than it ought to be, even with fund board directors. In the event you missed it, in this late March letter to CEOs, the FCA identifies its “view of key causes of harm” and lays out its supervisory strategies, all of which can be read here.
GAM’s fallen star
The FCA has ruled that GAM’s former star fund manager Tim Haywood breached the firm’s gifts and entertainment policy when he accepted a personal trip to Sardinia on Greensill Capital’s private jet. The Financial Times has the details here.
FCA makes key staff hires
Portfolio Adviser reports on some key hires made by the FCA here, as it seeks to hand more decision-making responsibility to individual senior managers, rather than committees, in its endeavours to become more robust and efficient. Not a moment too soon, I hear you say?
Distribution Governance
Missing the target (market)
Wealth manager Quilter has written to clients who held an Abrdn fund on its platform as it was made available to retail investors by mistake. Investment Week reports here the Aberdeen Emerging Markets Sustainable Development Equity (Share Class K) fund was added to the Quilter platform in February 2021, and the wealth manager was advised by Abrdn it could be made fully available to retail investors. It shouldn’t have, and Quilter said that Abrdn was in touch saying that the availability of the fund was an “oversight on their part” as it should have been restricted to institutional investors only.
FBC ViewpointIt’s interesting to see evidence of Target Market work in practice at least. Too often the vast exchange of data between platforms and fund managers seems to generate very little in terms of tangible resultant action. Maybe this is a good thing. We’ll look to take a view on this and many other aspects of Distribution Oversight in our forthcoming white paper which will be published ahead of our FBC members digital meeting on the subject, taking place on 18th May. For more information click here. FBC members can register here. |
And, in other news this past fortnight
Falling fees
Morningstar says fund fees have fallen in most countries over the past three years citing a number of reasons but key amongst them being the heat that active managers are feeling as investors are increasingly drawn to a growing range of less expensive products. Financial Times covers the report here, and a summary of the report and the Morningstar press release is available here.
Industry consolidation
Hardly a new trend, but the Royal Bank of Canada’s deal to but wealth manager veteran Brewin Dolphin, one of the largest in the UK, is certainly newsworthy. Well covered in all media, the Financial Times report is here, and the reporting from Money Marketing can be found here.
Splitting chairs (and CEO roles)
FT reports, here, of succession planning for JP Morgan’s grey-haired veteran CEO and board chair, Jamie Dimon, suggest that a split between these two roles could be happening (with a “substantial majority” of investors wanting him to stay on as non-executive chair when he steps down as chief executive). This has reignited the debate in corporate America about the continued practice in many firms, including Coca-Cola and Goldman Sachs, of combining CEO and board chair (which is at odds with accepted governance best practice elsewhere in the world).
Summertime
Requirements issued by the Luxembourg financial regulator controlling the amount of work that can be done remotely are to come into force on July 1. And no, it’s not timed for the summer holidays that start in mid-July, but addresses issues of EU substance requirements, operational resilience and the like. Ignites Europe reports here.
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