Concerns for governance competency
Effective governance is a critical driver of investment performance, according to a survey by Aberdeen Asset Management.
The survey found as strategic investment opportunities became more difficult to quantify, there had been a movement globally towards governance as a point of differentiation.
Although 89 per cent of respondents had this sentiment, "governance competency and preparedness" was among the top three biggest concerns to respondents' own organisations.
Aberdeen head in Australia, Brett Jollie said attitudes to governance were changing.
"Until recently the focus was mainly on voting, and often passive. Investors are now prepared to go further and build relationships with boards. As this research shows, such engagement can help returns over the long-term," Jollie said.
"So, it's entirely natural for clients to query fund managers over their approach and effectiveness."
Respondents also thought asset managers should engage with investee companies on a range of topics, including corporate governance (92 per cent), board diversity, structure and succession planning (83 per cent), and corporate actions/takeovers (76 per cent).
The survey found regular engagement by asset managers with the companies in which they invest is essential, not only for monitoring those companies' governance standards, but in order for the asset managers themselves to demonstrate best practice.
Aberdeen head of corporate governance, Paul Lee said getting governance right was not easy.
"A lot of time is spent meeting people and listening — not just talking. Doing these things, and therefore getting governance right, is easier if you take a long-term approach," he said.
"A company is much more likely to talk to you if they don't think you'll sell their bonds or shares at the sight of one set of poor quarterly figures. We need to do more as an industry to invest for the long-term ourselves and encourage the companies we own to do the same."
Recommended for you
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
Following yesterday’s news about First Sentier Investors closing four investment teams, a second global asset manager has announced it is closing its only dedicated Australian fund.
