UK Stewardship Code

The UK Stewardship Code (“the Code”) published by the Financial Reporting Council (“the FRC”) aims to assist institutional investors to exercise their stewardship responsibilities more effectively. The FCA, via COBS 2.2.3, requires a firm that is managing investments for a professional client to disclose clearly in an accessible form:

  1. the nature of its commitment to the Financial Reporting Council’s Stewardship Code; or
  2. where it does not commit to the Code, its alternative investment strategy.

Cameron Hume supports fully the objectives of the Code, and its broader application by institutional investors. However, as a fixed income manager, Cameron Hume does not invest in equities. Consequently, the provisions of the code do not apply to the investments undertaken by Cameron Hume on behalf of its clients. The nature of Cameron Hume’s disclosure is therefore to explain its alternative approach.

Principle 1
Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities.

This disclosure describes Cameron Hume policy with respect to the Code.

Principle 2
Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.

Our conflicts of interest policy details how we identify and manage conflicts of interest and considers conflicts that may arise between Cameron Hume, its staff and its clients, and between different clients. In the event that any conflicts of interest arose that were within the scope of the Code, Cameron Hume would act in accordance with this policy.

A copy of the policy is available upon request from the Compliance Officer (details at the end of this statement).

Principle 3
Institutional investors should monitor their investee companies.

The portfolios managed by Cameron Hume on behalf of clients do not hold equities and so we have no opportunity to vote at shareholder meetings. Our clients do invest in bonds issued by companies, but in the normal course of events bondholders do not have an opportunity to vote on matters of corporate policy, governance or strategy. This necessarily reduces the influence that we may have on such matters. However, Cameron Hume takes an interest in such matters and adverse corporate developments or governance concerns may influence our decision to invest.

Principle 4
Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value.

As the portfolios managed by Cameron Hume on behalf of clients do not hold equities we cannot escalate our concerns to a company’s board and in this event our recourse generally will be to act collectively with other bondholders where appropriate.

Principle 5
Institutional investors should be willing to act collectively with other investors where appropriate. Cameron Hume is willing to act collectively with other investors in line with the requirements of the code.

As the circumstances in which Cameron Hume will wish to act collectively with other investors are narrow, because of the limited rights of bondholders, and likely to be motivated by unique circumstances, the company does not intend to establish any prescriptive policy as to how it might act collectively with other investors. In the event of need, and subject to the conflict of interest policy and the relevant regulatory and legislative requirements, Cameron Hume would be willing to act collectively. Any invitations for potential collective engagement should be sent in the first case to the Compliance Officer (details at the end of this statement).

Principle 6
Institutional investors should have a clear policy on voting and disclosure of voting activity.

The portfolios managed by Cameron Hume on behalf of clients do not hold equities and, therefore, will not have the right to vote at shareholder meetings of investee companies. The circumstances in which clients of Cameron Hume are able to vote will generally be related to changes in the contractual terms of the bonds held. Our general policy is to vote on all such occasions and disclose all such activity to our clients.

Principle 7
Institutional investors should report periodically on their stewardship and voting activities.

As disclosed above, the nature of Cameron Hume’s investment strategy is such that the Code does not generally apply to Cameron Hume as an institutional investor. Relevant stewardship or similar matters and all voting activity will be reported to clients in their investment reports.

Contact
For further information on the application of the Code and related matters, please contact the Compliance Officer: chris.torkington@cameronhume.com