Last week, ShareAction, a UK registered charity promoting an investment system which serves savers, society and the environment, released a survey on Responsible Investment Performance of European Asset Managers. For this study, ShareAction has examined and ranked the transparency and Responsible investment practices of 40 of the largest asset managers in Europe which control €21 trillion of assets between them.
ShareAction sought to investigate whether these asset management firms are behaving as responsible investors, addressing environmental, social and governance (ESG) criteria. To undertake this study, ShareAction used publicly available information and a questionnaire that 31 of the firms completed. ShareAction concluded that, despite the fact that all of them (except Santander Asset Management) have signed the Principles for Responsible Investment (PRI), the actual quality of Responsible Investment performances and disclosures varies among these asset managers. The study points out that the quality of Responsible Investment does not depend on the size of the firm, the region, ownership structure or whether they are predominantly active or passive managers.
The asset managers were assessed on several criteria: transparency (accessibility of information about voting and engagement with investee companies), conflicts of interest policies and, for the first time, ShareAction looked at the transparency of disclosure around fees and charges. ShareAction based its study on the KIID (Key Investors Information Documents) and focused on the disclosure of direct fees and charges. The study concludes that only 82.5% of asset managers make fees and charges fund literature easily accessible and only 17.5% go beyond the minimum legal requirements by providing additional information on fees and charges on their website.
The study remarks that in general asset manager websites make scant acknowledgment of indirect costs such as transaction costs, trading and asset servicing charges, administration, regulation and reporting costs that are frequently charged to clients.
ShareAction concludes that “Overall, disclosure of fees and charges is poor across the sector and the information that is available is often ambiguous. Standardization in disclosure of investment costs is lacking and this makes is difficult to compare and understand such costs across the sector and between countries. In short, far better disclosure and greater transparency is needed if client and beneficiary interests are to be met by Europe’s asset management sector.”
Consult ShareAction survey and the ranking here
Read Investment and Pensions Europe article here