The UK Stewardship Code
Anavon Capital LLP (Anavon) is an asset management company, which advises on and manages assets for a select group of professional clients.
Anavon welcomes the publication by the Financial Reporting Council (‘FRC‛) of the UK Stewardship Code. The Code aims to enhance the quality of engagement between institutional investors and companies so as to help improve long-term returns to shareholders and the efficient exercise of governance responsibilities. It sets out good practice on engagement with investee companies and should be applied by firms on a ‘comply or explain’ basis. The FRC recognises that not all parts of the Code will be relevant to all institutional investors, while smaller institutions may judge that some of its principles and guidance are disproportionate in their case.
Anavon is also a signatory to the ESG Investment Principles and this Stewardship Code disclosure should be read in conjunction with our
Please find below Anavon’s statement of compliance in relation to the seven principles of the Code.
Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities
Anavon acts as an agent on behalf of its clients, and as such is not the beneficial owner of the investee company’s shares. Only upon authorisation by Anavon’s clients are voting decisions made on their behalf. Anavon considers the corporate governance of any investee company as part of the overall assessment prior to and during the investment process. This consideration includes a thorough consideration of the Principles for Responsible Investment and the firm’s ESG policies and processes. Ingeneral, Anavon considers that firms with a strong ESG profile are likely to perform better for investors over the longer term and this is a view shared by its clients. Normally voting will be in support of positive ESG steps, though Anavon may support firms with a weak ESG footprint where we believe tangible steps are being taken to improve the ESG profile of the firm to the benefit of the undelying investors.
Anavon exercises voting rights arising from shareholdings when it is in its clients’ interests to do so.
Anavon communicates its voting record directly to its professional clients who often have a duty to report to their underlying investors on these matters.
Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed
It is Anavon’s policy and duty to act in the best interests of all of its clients. Anavon has a detailed policy on managing any conflicts of interest in accordance with existing FCA rules, including personal account dealing, client order handling, aggregation and allocation between accounts, best execution, and use of dealing commissions. All reasonable steps are taken to prevent conflicts of interest. Anavon does not trade for itself and holds no proprietary positions.
Anavon also operates a Remuneration Policy in accordance with the requirements of the FCA “SYSC” Rulebook to ensure that the remuneration structures of the firm do not
The owners of Anavon are invested in their fund vehicles alongside external investors and have much stricter constraints on their ability to redeem
The Conflict of Interest procedures and policy are discussed in the investment management agreements signed with professional clients and the detailed policy and conflicts map is available to clients on request at any time.
Institutional investors should monitor their investee companies
Anavon continually monitors its investee companies as part of its commitment to manage assets on behalf of its clients. This includes reviewing publicly available information on all investee companies, as well as third party investment research and industry / peer group comparison. When it is in the best interests of its clients, Anavon may engage in dialogue with investee company boards.
Engagement and research places a high emphasis on the investee company’s ESG profile as Anavon believes this is a key driver of long-term value creation. As well attempting to ensure investee companies continue to engage meaningfully with ESG issues, Anavon will engage with under-valued companies with a poor ESG profile and support meaningful actions by those companies to improve their ESG profile where this will, in Anavon’s judgment, improve the investee company’s lon-term value to the benefit of its shareholders.
Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value
Anavon retains discretion over how and when it may escalate its activities in respect of intervention. Active intervention may take place if Anavon believes that this course of action would be in the best interests of its clients.
As the use of the ESG Principles for Responsible Investment are central to Anavon’s investment process and decision-making, these matters amongst others will be considered at the regular investment meetings and portfolio managers will make the collective decision to engage with senior management of the investee company concerned. The investment meetings take place regularly and involve detailed examination of new investment theses and the review of the continuing validity of current investment theses.
Institutional investors should be willing to act collectively with other investors where appropriate
Only when legally permissible, Anavon may consider acting collectively with other investors and only in an appropriate manner. Anavon is also prepared to be bound by any restrictions on its freedom to act as any consequence arising from an engagement in a collective group.
Any collective action taken by Anavon with other investors will be undertaken withn the framework of its ESG Policy and adherence to the Principles of Responsible investing.
Anavon is sensitive to situations where acting collectively with other investors might constitute inappropriately “acting in concert” and also where the knowledge that it is acting with other investors might, itself, constitute market sensitive information. Anavon will only act in concert where it is legally permissable to do so and does not create market distortion or an improper benefit for its investors.
Institutional investors should have a clear policy on voting and disclosure of voting activity
Anavon votes its shares where it is in its clients’ interests to do so.
As Anavon acts as an agent for its clients’ assets, any voting record is available to its clients either via their custodian or directly from Anavon. Anavon does not publicly disclose voting records as it believes such information is confidential to its clients.
However Anavon is clear to its clients that it believes that ESG concerns are key (but not the only) drivers of long-term value creation and Anavon looks to vote in a way which supports and develops an investee firm’s ESG profile, or which encourages firms with a poor ESG profile to improve it where this adds genuine long-term value to the investee company.
Institutional investors should report periodically on their stewardship and voting activities
Upon request, Anavon will provide to its clients any details of how Anavon voted on their behalf on any particular proxy, in a format agreed with each client.
Anavon may also disclose, in its periodic updates to investors, how it has approached ESG and other Stewardship engagement with investee companies on their behalf.
Last updated on 16 July 2019.