Statement of Commitment to the UK Stewardship Code
Under the Financial Conduct Authority (FCA) rules, Oakglen Wealth Limited (“Oakglen”, “we”, “us”, “our”) must disclose the nature of our commitment to the Financial Reporting Council’s (FRC’s) Stewardship Code (the “Code”), or where we do not commit to the Code, our alternative investment strategy.
The FCA rules apply in circumstances where we manage investments for professional clients that are not natural persons. The Code is therefore addressed to firms who manage, on a discretionary basis, assets on behalf of institutional shareholders (non-natural persons) such as pension funds, insurance companies, investment trusts and other collective investment vehicles. The FRC recognises that capital is invested in a range of asset classes over which investors have different terms and investment periods, rights and levels of influence. The Code does not, therefore, solely apply to equity investments.
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 Code, which is voluntary, comprises a set of ‘apply and explain’ Principles for asset managers and asset owners. The Code does not prescribe a single approach to effective stewardship. Instead, it allows organisations to meet the expectations in a manner that is aligned with their own business model and strategy.
The FRC recognises that not all parts of the Code will be relevant to all institutional investors and smaller institutions may decide that some of the principles and guidance is not proportionate, based on the size and complexity of the business. Some asset managers may legitimately choose not to engage with companies, depending on their investment strategy.
Oakglen considers corporate engagement an important element of the investment process and whilst not being a direct signatory to the Code at present, supports the aims of the Code.
Oakglen’s approach to the Code principles is explained below. We will seek to review this statement on an annual basis, and update this where necessary to reflect changes in actual practice.
Principle 1 – Signatories’ purpose, investment beliefs, strategy, and culture enable stewardship that creates long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.
We have established a responsible and informed investment management framework outlining the minimum standards to be adhered to in the provision of our investment services. We focus on risk as much as return. Our investment beliefs provide a framework for exercising judgement and making investments decisions. These include considerations of investment horizon; strategic asset allocation; risk management and costs considerations, the purpose being to provide the best outcomes for our clients whilst creating a better future through responsible investing.
Principle 2 – Governance, Resources and Incentives support stewardship.
Our statement of commitment to the Code is reviewed and approved by the board of directors periodically. We have appropriately resourced stewardship activities, including our organisational structure and investment in systems, processes, research, and analysis. Our employees are experienced and highly qualified. The extent of resources and activities undertaken takes account of, and is informed by the size, scale, and complexity of our business
Principle 3 – Signatories manage conflicts of interest to put the best interests of clients and beneficiaries first.
Conflicts may arise as a result of ownership structure; business relationships between asset owners and asset managers, and/or the assets they manage; differences between the stewardship policies of managers and their clients; cross-directorships; bond and equity managers’ objectives; and client or beneficiary interests diverging from each other. Oakglen identifies and mitigates any conflicts of interest between itself, its clients, and between clients that may result in a loss to them. We maintain a conflicts of interest policy which is available on request. The policy is subject to periodic review. We have a fiduciary responsibility to act in the best interest of our clients.
Principle 4 – Signatories identify and respond to market-wide and systemic risks to promote a well-functioning financial system.
Oakglen recognise that market-wide risks are those that lead to financial loss or affect overall performance of the entire market. Systemic risks may lead to the collapse of an industry, financial market or economy and include climate change. We monitor market and systemic risks daily, and via our Investment Committee. We review our investment strategies regularly. Where relevant we may also take part in industry initiatives to promote continued improvement of the functioning of financial markets.
Principle 5 – Signatories review their policies, assure their processes and assess the effectiveness of their activities.
We have policies, procedures, systems and controls developed as part of our risk management framework. These include portfolio management policy, compliance and risk management. These policies are reviewed periodically with oversight from our Governance, Risk Management & Compliance Committee and the Board of Directors. Our external auditor is engaged on an annual basis with their work including a regulatory audit. We also engage an independent compliance consultant to undertake assurance reviews from time to time.
Principle 6 – Signatories take account of client and beneficiary needs and communicate the activities and outcomes of their stewardship and investment to them.
Oakglen seeks to fully understand our clients investment needs, with a view to creating the optimal investment strategy tailored to individual client requirements. We regularly communicate with clients on our investment activities, providing information such as investment commentaries, which are researched and written by our in-house investment specialists. These communications include information on our stewardship activities.
Principle 7 – Signatories systematically integrate stewardship and investment, including material environmental, social and governance issues, and climate change, to fulfil their responsibilities.
Oakglen has established responsible investment management and operations policies outlining the minimum standards that need to be adhered to in the provision of any investment service. Whilst we do not offer specific ESG investment services as standard, we do have the capability of doing so if the client wishes an ESG mandate. We will also abide by any client individually requested restrictions, where this does not prevent effective management, and where they are definable within the investment platform. We maintain an internal list of ethical restrictions that we apply to our investment strategies.
Principle 8 – Signatories monitor and hold to account managers and/or service providers.
Oakglen maintain registers of third party and service providers, including outsourcing providers. We undertake robust due diligence procedures where appropriate, and in line with FCA rules, before entering into agreements with service providers. All service providers are monitored on an ongoing basis.
Principle 9 – Signatories engage with issuers to maintain or enhance the value of assets.
We believe it is a vital step in the investment process to consider each company’s ability to create and sustain value. This includes challenging and questioning companies we invest in on matters that may affect their value. Our investment objective is to deliver superior risk-adjusted investment returns by providing risk/reward-efficient portfolios for our clients. We undertake initial and ongoing due diligence on the investments we intend to use within our mandates, to create approved ‘focus lists’. We assess and monitor each issuer’s governance, strategy and performance to ensure meets, and continues to meet, the criteria for investment. We will review financial statements, stock market releases, ratings alerts, fund recommendation reports and other financial material. If required, we will communicate with the issuers to elicit further information with regards to such matters as the issuer’s business activities, strategy and/or corporate governance. We may also arrange to visit issuers as part of the due diligence process or arrange meetings virtually.
Principle 10 – Signatories, where necessary, participate in collaborative engagement to influence issuers.
We are confident that we have the expertise to deal individually with any concerns that we might have about the issuer’s business activities, strategy or corporate governance. Depending on the circumstances, we may simply decide to dispose of or reduce our holdings. However, if we believe the issue is significant and wish to retain our holdings, collective action with other shareholders may be considered more effective. These situations will be dealt with on a case-by-case basis. Collective action will only be undertaken where we determine it will not breach legal, regulatory, market conduct or confidentiality obligations.
Principle 11 – Signatories, where necessary, escalate stewardship activities to influence issuers.
When one-to-one engagement does not provide appropriate results, we may then look to escalate our engagement by collaborating with other institutional investors directly. Ultimately, we may divest from the securities of an unresponsive company. Each situation is reviewed on a case-by-case basis, whilst considering the best course of action for our clients.
Principle 12 – Signatories actively exercise their rights and responsibilities.
Decisions to participate in a voting exercise of an issuer are made by our Investment Committee. Where we decide to participate, we will exercise our vote in a way we consider to be in the best interests of our clients. Factors considered include the subject of the vote, the value of the portfolio holdings in relation to the total holdings, the influence we may realistically be able to exert, and any geographical considerations. An account of our voting activity (if any) is available on request.