Under COBS 2.2 of the FCA Handbook, PGIM Wadhwani LLP (“PGIMW”) is required to include on this website a disclosure about the nature of its commitment to the UK Financial Reporting Council's UK Stewardship Code (the "Code") or, where it does not commit to the Code, its alternative investment strategy.
The Code was first published in July 2010 and updated in September 2012. In 2020 the FCA published the new UK Stewardship Code 2020 which took effect 1st January 2020. The Code consists of 12 principles for asset managers and asset owners, and 6 principles for service providers.
“Stewardship” is defined by the FRC as ‘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 aims to enhance the quality of engagement between institutional investors and companies 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 that investment companies should aspire to. It is applied by firms on a “comply or explain” basis.
The 2020 Code for principles for asset managers and asset owners are as follows:
- 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.
- Signatories’ governance, resources and incentives support stewardship.
- Signatories manage conflicts of interest to put the best interests of clients and beneficiaries first
- Signatories identify and respond to market-wide and systemic risks to promote a well-functioning financial system.
- Signatories review their policies, assure their processes and assess the effectiveness of their activities.
- Signatories take account of client and beneficiary needs and communicate the activities and outcomes of their stewardship and investment to them.
- Signatories systematically integrate stewardship and investment, including material environmental, social and governance issues, and climate change, to fulfil their responsibilities
- Signatories monitor and hold to account managers and/or service providers.
- Signatories engage with issuers to maintain or enhance the value of assets.
- Signatories, where necessary, participate in collaborative engagement to influence issuers.
- Signatories, where necessary, escalate stewardship activities to influence issuers.
- Signatories actively exercise their rights and responsibilities.
PGIMW’s investment strategy is global quantitative macro strategies, mostly managed futures and foreign exchange. These strategies do invest in individual equity securities, trade directly in listed companies in the UK or hold shares that carry voting rights. Therefore, although the Partnership supports the objectives set out within the Code, and adheres to the highest standards of corporate governance and due diligence in respect of its investments, the provisions are not deemed to be relevant to the type of investment strategy and trading currently undertaken by PGIMW. PGIMW will review its commitment to the 2020 Code at last annually and update this disclosure accordingly.