This document also serves to outline our approach to meeting our obligations under the Shareholders Rights Directive and the associated rules within the FCA Handbook.
We take a long term in our approach to investment and see adherence to the UK Stewardship Code as an important part of the overall approach to investment management at TCF Fund Managers LLP.
The Financial Reporting Council (FRC) encourages all UK institutional investors to publish a statement on their website of the extent to which they have complied with the Code, containing a description of how the principles of the Code have been applied and disclosure of specific information.
This document explains how TCF Fund Managers LLP complies with the Code on behalf of its clients.
PRINCIPLE 1: PUBLICLY DISCLOSE THEIR POLICY ON HOW THEY WILL DISCHARGE THEIR STEWARDSHIP RESPONSIBILITIES.
TCF Fund Managers LLP adheres to the Stewardship Code by undertaking voting on company / fund proposals and engaging with companies / fund managers where TCF Fund Managers LLP deems it appropriate. TCF Fund Managers LLP adopts a proportionate policy recognising that the aggregate holdings of TCF Fund Managers LLP’s client will normally represent a very small proportion of an investment fund and to its position mainly as a manager of funds.
TCF Fund Managers LLP, for its clients, invests in authorised investment funds and does not invest directly in companies.
The funds bought by TCF Fund Managers LLP are either recommended by external investment advisers, who have conducted due diligence before recommending them to TCF Fund Managers LLP, or are chosen by the TCF Fund Managers LLP in-house team that undertakes research to establish the funds’ investment policies for strategy and stock selection and to ensure that the fund manager has appropriate governance policies in place, including a voting policy.
If TCF Fund Managers LLP became concerned about governance within the fund or had other concerns, it would engage with the fund manager directly. If it was not satisfied with the response, TCF Fund Managers LLP would look for an alternative fund that did have the appropriate policies in place.
TCF Fund Managers LLP does not engage with the managers of passive funds in which its client funds are invested. However, it would expect these managers to engage and vote in line with the policies laid out on their respective websites in terms of engagement and sustainability of financial performance over the long term as well as providing insight into environmental, social and governance considerations where possible. If TCF Fund Managers LLP was particularly interested in a governance issue with any stock which was also held in a passive fund, it may be appropriate to engage with the fund manager to coordinate engagement activities.
TCF Fund Managers LLP’s voting policy is not to vote against the recommendation made by the company / fund unless there are compelling reasons.
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.
TCF Fund Managers LLP has a conflict of interest policy. It is regularly reviewed and updated for new conflicts that may arise and to improve procedures. TCF Fund Managers LLP has identified areas where conflicts of interest may arise. An example is the receipt of sensitive information. Due to the nature of the investments TCF Fund Managers LLP makes, it is unlikely this will be a frequent occurrence and any such information is reported to the Compliance Officer.
In all situations, the overriding purpose of the TCF Fund Managers LLP stewardship policy is to protect and enhance the economic interests of our clients, so the conflict is settled by reference to the clients’ best interests. If this does not produce a satisfactory outcome or if there is a conflict that falls outside the terms of reference of the policy, TCF Fund Managers LLP’s governing body will convene to resolve it.
PRINCIPLE 3 – INSTITUTIONAL INVESTORS SHOULD MONITOR THEIR INVESTEE COMPANIES.
Due to the nature of TCF Fund Managers LLP’s mainly manager of funds’ business, the main area of monitoring is the fund groups rather than individual companies, which are held passively. All fund data is monitored closely by the TCF Fund Managers LLP investment management team to assess whether funds are keeping to their investment objectives, performing in line with expectations and in line with benchmarks, if appropriate.
TCF Fund Managers LLP would either choose an alternative fund or engage with the fund’s fund manager if there were concerns about performance, risks, management or corporate governance.
On very rare occasions, TCF Fund Managers LLP might consider becoming an insider. However, engagement without being an insider would be the preferred route. TCF Fund Managers LLP is aware of the risks of becoming an insider and has procedures and policies in place, which mean that such dialogue is kept out of the public domain and registered with the compliance department. The information then remains only between the manager with the information, the compliance department and the company until the matter is in the public domain.
PRINCIPLE 4 – INSTITUTIONAL INVESTORS SHOULD ESTABLISH CLEAR GUIDELINES ON WHEN AND HOW THEY WILL ESCALATE THEIR STEWARDSHIP ACTIVITIES AS A METHOD OF PROTECTING AND ENHANCING SHAREHOLDER VALUE.
TCF Fund Managers LLP is mainly a manager of funds manager; consequently, the opportunities for TCF Fund Managers LLP to intervene or escalate their stewardship activities is fairly limited. If TCF Fund Managers LLP had concerns about a company held in a fund in terms of its performance, governance, remuneration or approach to risk, it would either sell the fund or enter into an active dialogue with the manager of the fund.
PRINCIPLE 5 – INSTITUTIONAL INVESTORS SHOULD BE WILLING TO ACT COLLECTIVELY WITH OTHER INVESTORS WHERE APPROPRIATE.
Where TCF Fund Managers LLP believes it is in the interests of its clients, it will participate in collaborative engagement activities. Collaborative engagement may be more appropriate than acting alone in certain instances; such as but not limited to, during times of significant corporate or wider economic stress, when the risks posed threaten the ability of the company / fund to continue, and where TCF Fund Managers LLP’s shareholding may not be sufficient to exert influence alone.
PRINCIPLE 6 – INSTITUTIONAL INVESTORS SHOULD HAVE A CLEAR POLICY ON VOTING AND DISCLOSURE OF VOTING ACTIVITY.
TCF Fund Managers LLP takes into account the UK Corporate Governance Code and other international guidance on governance when voting such as board structure, remuneration and shareholder rights.
It will only vote against the management recommendation if there are strong reasons for doing so. Given the nature of TCF Fund Managers LLP’s investment activities (manager of funds on platforms) and its market size, TCF Fund Managers does not normally exercise its voting rights except in accordance with the policy of the platform (as chosen by the client or the client’s adviser) on which client assets are held.
The policy on disclosure of voting activity is to make records available on request to clients who wish to see it. The number of clients who make such request has been very few; consequently, this has been a satisfactory way to manage the voting reports.
PRINCIPLE 7 – INSTITUTIONAL INVESTORS SHOULD REPORT PERIODICALLY ON THEIR STEWARDSHIP AND VOTING ACTIVITIES.
TCF Fund Managers LLP reports to clients on stewardship and voting activity, when requested; which, given the manager of funds nature of TCF Fund Managers investment activity, tends not to be very often.