UK Stewardship Code
UK Stewardship Code
The Financial Reporting Council (FRC) is an independent regulator overseeing financial reporting, accounting and auditing and sets the UK Corporate Governance and Stewardship Codes. The Stewardship Code sets the benchmark for institutional investors to meet ownership obligations in respect of UK companies and we are required to either comply with the code or explain why we do not.
At JM Finn, although we do manage a limited number of institutional clients, we primarily manage the assets of private clients, or retail investors in FCA parlance. On this basis, we have elected not to comply with the UK Stewardship Code. That said, we believe it is in the interests of our clients to disclose our thinking around these issues and our plans for the future.
JM Finn has long been a provider of personalised investment management services principally to private clients. With more than 80% of all assets under management serviced on a discretionary basis, our investment managers consider a wide range of factors such as investment objectives, time horizon, risk appetite and ethical concerns when constructing investment portfolios.
“Stewardship is the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society” The UK Stewardship Code 2020
- How we support good Stewardship
At JM Finn, we primarily focus on investing in direct securities. Our bottom-up approach starts with active engagement with the companies in which we invest and our central research team works hard to maintain relationships with the companies in which we invest, and many of those in which we do not, allowing us to meet with these companies to understand exactly what is driving their business.
- Conflicts of interest
JM Finn takes all reasonable steps to treat clients fairly and requires all staff to comply with a Conflicts of Interest policy which obliges them to disregard any interest, relationship or arrangement that the firm may have in relation to the client’s transaction or investment.
Senior Management, through the firm’s Management Committee, is responsible for identifying conflicts of interest and ensuring they are managed appropriately. This policy document is reviewed as a whole at least annually by the Management Committee and is outside of the remit of the Stewardship Policy.
- Details of an internal stewardship committee
At present, the Stewardship Policy is the responsibility of the Management Committee.
- The monitoring of the companies in which we invest
A core aspect of the centralised research function is to monitor the companies in which we invest. Any findings from the ongoing monitoring are reported to our investment managers to aid their decision-making as to whether to buy, sell or hold the stock. Going forward we anticipate the monitoring of non-financial reporting of our investee companies via the engagement of a third party in line with the stewardship policy of our parent company, Delen Private Bank. We expect this to be in place by 2021.
- Engagement with those companies
The bottom-up nature of our investment process means that we have always tried to engage with the companies in which we invest our clients’ assets. We see this as prudent investment management and historically, have engaged directly with companies when we felt it was appropriate. While we do not currently adhere to the Stewardship Code we believe that engagement is increasingly important and we are currently in the process of engaging a third party to engage actively with our investee companies on behalf of those assets we currently manage on a discretionary basis. This will bring us into line with the policies of our parent company, Delen Private Bank, who are a signatory of the UN Principles of Responsible Investment. We anticipate devising a complete engagement policy by 2021
- Voting on behalf of clients
At present, we do not vote on behalf of our clients. However, the aforementioned engagement of a third party will see us outsourcing our voting policy in line with that of our parent company.
- Reporting on the impact of our policy
At present, we are unable to report on the impact of our stewardship policy but will do so in more detail in due course. We anticipate a new engagement policy to be in place by 2021.