Liontrust engagement and voting report 2021 - Flipbook - Page 15
Multi-Asset engagement process
Over the last year, Liontrust’s Multi-Asset team started to formalise its
approach to integrating ESG considerations into the fund selection process.
One individual is currently responsible for this initiative but, in
time, all team members will be responsible for incorporating ESG
elements into the investment process.
A framework has been initiated whereby preliminary questionnaires
are followed by in-depth meetings at both company and fund levels to
score constituent funds according to their managers’ ESG integration
efforts. Approximately 70 fund house questionnaires were sent in
2021; subsequent meetings with companies’ ESG/Responsible
Investment representatives were prioritised if we held equity funds,
which included around half of these asset managers. The team
conducted over 30 similar calls at (equity) fund level to investigate the
managers’ approaches and attitudes to integrating ESG. The team
is currently in the process of sending out its annual questionnaires. In
addition to equity-specific topics, the team now has targeted questions
for fixed income and alternative asset classes. The team will follow up
with calls/meetings in similar fashion to assess ESG integration.
To date, while equity funds have not been removed on ESG
concerns in isolation, sell recommendations have been made
related to potential ESG risks. The over-riding theme in these cases
has been the team’s concern around UK deep value funds managed
by smaller outfits (i.e. limited resources) that it believes must still
“catch up” on integrating ESG factors into its investment processes.
Supplementing this approach includes a formal voting policy
with support from the ISS proxy adviser. The team follows the ISS
recommendations with regards to its holdings because they provide
valuable insights. Overall, the team does not deviate from ISS’
recommendations with regards to voting on open-ended funds’
proposals but there have been occasions when the team has felt it
is pertinent to vote against the re-election of a director, for example,
on the investment trust side.
In 2022, the team intends to enhance its engagement strategy in
line with the broader Liontrust initiatives and questionnaires have
been updated accordingly. The team aims to expand engagement
with investment trusts as these companies are where they can
potentially make a difference due to direct ownership as opposed
to via a fund.
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