This document sets out the approach by GAM to responsible ownership, with regard to the guidelines set out in the UK Stewardship Code (the “Code”) published by the Financial Reporting Council (“FRC”) in July 2010.
GAM delivers active investment management to private clients, institutions and intermediaries. As well as management within funds, GAM uses active asset allocation in managed portfolios to meet clients' diverse needs. Our funds and strategies cover a broad range of asset classes and currencies to cater for all market conditions. We have a duty to act in the best interests of our clients and to protect and enhance the economic value of our clients’ investments.
Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities.
Corporate governance and engagement are key aspects of GAM’s investment process. Upholding sound corporate governance standards is essential in order to protect and enhance the economic value of GAM’s investments. As such, where appropriate, we meet with the board and senior management of investee companies, and intervene where we believe this will enhance the long-term value of our investments.
GAM has specific voting guidelines and ensures that votes cast are transparent to all investors. We engage Institutional Shareholder Services Inc. (“ISS”), a specialist independent corporate governance service provider, to ensure that informed votes are cast in an efficient and timely manner and in accordance with our policy.
ISS collates all proxy voting materials and research based on voting models and principles that are performed on each of the items advised on the meeting agenda. Furthermore, recommendations are made for each agenda item and subsequently, a comprehensive process of casting the recommended votes is followed for each meeting with the investee companies’ respective custodians. The voting process and decisions made are ultimately under GAM’s control. With respect to external funds, however, third party managers have the option to independently manage the voting functions. In the event a third party manager votes against management, such manager must provide a reasonable explanation for the voting decision.
Best practice industry guidelines are considered when assessing companies’ explanations in relation to the UK Corporate Governance Code (the “Governance Code”).
Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.
GAM implements comprehensive conflicts of interest and code of ethics policies, both of which seek to mitigate and manage conflicts or potential conflicts should they arise.
As a matter of best practice, our duty is to act in the interests of our clients when considering corporate governance and voting matters. Our policies are designed to ensure that the management of any conflict is carried out in such a manner that clients are not disadvantaged as a result. In such circumstances, GAM will assess on a case-by-case basis and may vote on or depart from a policy with due consideration to the best interest of our clients and GAM’s own interest. Key or potential conflicts of interest and management thereof are documented and reviewed on a quarterly basis.
Institutional investors should monitor their investee companies.
We extensively research and monitor the companies in which we invest and corporate governance is also a key aspect of this investment analysis. Our manager research capability is designed to deliver real expertise in each underlying strategy using specialist investment teams, each dedicated to a particular market segment. Meetings with management of target companies are attended by each team in order to uncover effective board and committee structures and, where necessary, provide input on areas of concern. GAM holds regular meetings with the management of investee companies to discuss strategic, operational and governance matters.
We believe our practices are in line with Principle 3 of the Code. Furthermore, under the Governance Code, companies are required to comply or explain their response to the relevant principles and note all explanations for non-compliance, as reflected in our voting process.
There may be occasion where we do not wish to be made insiders and we therefore expect investee companies and their advisers to ensure that information which could affect our ability to deal in the shares of the company concerned is not conveyed to us without agreement.
Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value.
GAM seeks to build long-term relationships with the board and senior management by engaging with companies in which we invest, as appropriate to the nature of our investment. This is undertaken through our participation in shareholder meetings, private meetings and formal written communications. Such engagement is particularly important when addressing contentious issues rather than merely voting against management without explanation.
We develop long-term relationships with investee company boards and management and as such, this enables us to deal with any concerns that we may develop. Should contentious issues arise in relation to items proposed at a shareholder meeting, GAM will undertake initial discussions with management so that both sides may articulate their position. In the event that this approach is unsuccessful, we will interact with other shareholders, taking into consideration any applicable legal or regulatory obligations.
Institutional investors should be willing to act collectively with other investors where appropriate.
Whilst GAM’s usual policy is to actively engage in discussions with an investee company, GAM will also engage with other investors where appropriate, and subject to our conflicts of interest and code of ethics policies, where we consider such engagement to be in the best interests of shareholders.
Institutional investors should have a clear policy on voting and disclosure of voting activity.
GAM engages ISS for the provision of proxy voting services. ISS has an internet based platform which allows fund managers to cast informed votes without having to relinquish control over policy or final voting authority. In the event a fund manager decides to vote against the recommendations made by ISS on the voting of agenda items, GAM has, at its discretion, access to the ISS voting system which enables it to change the vote as per the fund manager’s wishes.
Institutional investors should report periodically on their stewardship and voting activities.
ISS’ independent proxy voting and corporate governance services to GAM are carried out in accordance with our policy.
GAM periodically reports on proxy voting decisions, engagement activities and findings to clients who request that information. Through our engagement with ISS, we are able to report on how we have instructed votes at all meetings through the systems utilised in our research and voting processes.
We keep a record on voting activity and explanations as to the reasons for voting against management.
Last revised January 2015.
2015 Stewardship Report