Activist fund managers fare best

FUND managers ISIS, HBOS-backed Insight and the Co-op group are the City's most activist institutional shareholders and are also among the industry's top performers, new research shows.

However the overall industry is mired by its lack of transparency and just three of the largest 30 institutions in the City have 'excellent' disclosure procedures.

The findings come from ii-Profiles, a new tracker of corporate governance concerns and shareholder voting.

According to its findings, ISIS Asset Management, formed by the merger of Friends Ivory & Sime and Royal & SunAlliance Investments and headed by Howard Carter, is the most activist fund and opposed 57% of votes on company share option proposals in the last quarter.

The Co-operative Insurance Society, which has funds of £19bn under investment, and Insight Investment, the asset management arm of HBOS also scored highly.

ISIS previously voted against big executive pay rises at GlaxoSmithKline, a new share option scheme at Six Continents and took a lead in persuading Tesco to look at its supply chain following revelations that it was using timber from non-sustainable sources. More recently, it voted unsuccessfully against the appointment of James Murdoch to the chief executive slot at BSkyB.

Karina Litvack, head of socially responsible investment at ISIS, said activism by major shareholders is here to stay.

'As shareholders, we have an obligation to speak up and make sure companies adhere to our policies on social responsibility. Unquestionably we are able to make a difference. People used to be inclined to just nod things through and that's changing,'

The co-founder of ii-Profiles,David Ladipo, says the public image of some funds is not always matched by their voting records. 'There are some surprises. There are some big differences between some institutions' public positions and their voting records,'

Ladipo said the leading activist funds had broken City taboos about openness and transparency: 'They've managed to break the consensus in the City that you can't disclose voting records and how institutions engage with companies they invest in. More are providing the detail of their voting policies and their actual voting records, too.'

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