Fisher Investments takes an active approach to equity ownership rights and responsibilities, founded on the principle that we are a fiduciary. We manage the assets entrusted to us in accordance with the return objectives and risk tolerances specified by our clients in the interests of the ultimate beneficiaries of those assets.
The principal means by which we fulfill this obligation is research, in particular deep fundamental research into the drivers of performance, both of companies and industries. Research drives our approach to stewardship as it does with all other aspects of investment.
This document sets out how we implement this approach in relation to each of the principles of The UK Stewardship Code published by the Financial Reporting Council in July 2010.
Principle 1: Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities.
We consider sound corporate governance in the companies in which we invest to be of central importance in creating and sustaining long-term shareholder value. Our policy is set out in this document.
Principle 2: Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.
As a fiduciary, we seek to place the interests of our clients first and to avoid conflicts of interest, including those that arise from voting or engagement issues. We have not found conflicts of interest in applying this policy, but should they arise they will be raised, monitored and dealt with by our Investment Policy Committee.
Our policies and procedures for managing conflicts of interest in relation to corporate governance issues are contained in our Proxy Voting Policy and Procedures which are available upon request to clients and prospective clients.
Principle 3: Institutional investors should monitor their investee companies.
Monitoring companies in which we are invested on behalf of clients is a fundamental part of our research process. It is primarily the responsibility of our securities research analysts.
These experienced professionals conduct the initial research that leads to our acquisition of a stake in a company. Once we have acquired a stake, analysts continue to monitor each company we own to understand developments likely to affect the value of our clients’ holdings.
Our monitoring of companies includes consideration of the effectiveness of their boards and committee structures, other governance questions (including any departures from The UK Corporate Governance Code), and risks arising from social and environmental matters, to the extent that our research suggests that these issues are likely to be material to the risks and returns of investing in the company. We do not normally attend general meetings of companies in which we invest.
Principle 4: Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value.
We have not developed prescriptive guidelines for when and how we will escalate our activities. Rather, decisions to engage are made on a case-by-case basis by our Investment Policy Committee, and depend on the materiality of the issue, the responsiveness exhibited by the company to past communications, and our assessment of whether such engagement is in the best interests of our clients.
Principle 5: Institutional investors should be willing to act collectively with other investors where appropriate.
We will collaborate with other institutional investors in engaging with companies when we believe that doing so is likely to advance clients’ interests, is consistent with our firm's policies and procedures and is permissible under applicable laws and regulations.
Principle 6: Institutional investors should have a clear policy on voting and disclosure of voting activity.
We take proxy voting very seriously and have long devoted substantial research and management time and resources to ensuring we make good voting decisions. We use our best efforts to exercise our clients’ proxy rights and routinely cast our clients’ votes in the UK unless otherwise directed.
Outside of the UK, legal and practical hurdles sometimes stand in the way of our best efforts. For instance, certain countries restrict trading in shares around the dates when votes are due to take place. We may decide that the disadvantages of such restrictions outweigh the benefits of voting and choose not to exercise our rights on any particular occasion. On the other hand, some jurisdictions may not allow sufficient time or information to be made available to let us come to a considered judgment on which way to cast our ballot or we may simply not have the legal status to vote.
We do not automatically support the board. Rather, proxy voting decisions are taken on the basis of our procedures, informed by the recommendations of RiskMetrics, other outside research groups, and our company-specific research. We typically do not tell the company in advance of our intention to abstain or vote against management: doing so may expose our investment professionals to unhelpful pressure which can impede effective discharge of their responsibilities on behalf of clients.
We regard the exercise of proxy votes on behalf of our clients as a confidential matter between our clients and ourselves. We disclose proxy votes publicly only to the extent that we are required to do so by law—notably, in relation to US mutual funds.
Principle 7: Institutional investors should report periodically on their stewardship and voting activities.
We keep records of our proxy voting activity and provide regular reports to clients for whom we have the authority to vote upon request as part of a systematic portfolio reporting process.