Stewardship tool gathers steam, retail investors next in line
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The world’s largest asset manager BlackRock has said clients representing nearly half of the passive equities held globally can now use its voting tool as it is extending the tool to more pooled funds. The manager is also testing the tool for retail investors in the UK.
Stewardship has been singled out as a key tool for investors to bring their policies to life, but many have felt hamstrung by being just one of many investors in a pooled vehicle. Change has been called for over many years. The Association of Member Nominated Trustees has been lobbying for stewardship in pooled funds for nearly a decade, and a taskforce was set up by the government in late 2020, issuing 24 recommendations last year.
Stewardship has been singled out as a key tool for investors to bring their policies to life, but many have felt hamstrung by being just one of many investors in a pooled vehicle. Change has been called for over many years. The Association of Member Nominated Trustees has been lobbying for stewardship in pooled funds for nearly a decade, and a taskforce was set up by the government in late 2020, issuing 24 recommendations last year.
BlackRock launched its proxy voting tool Voting Choice in October 2021, going live in January 2022 for institutional clients using segregated accounts globally and within some pooled funds in the US and UK. The manager is now expanding the institutional pooled fund ranges eligible for the tool in the UK, while also starting to offer it within Canadian and Irish institutional pooled funds. More than 650 pooled funds in the US and the UK are now eligible to participate in BlackRock Voting Choice.
Retail investors might soon be able to express a voting preference, too. BlackRock said it is “working on ‘proof of concept’ for individual investors in [the] U.K. to participate in BlackRock Voting Choice”. The firm said it is working with industry partners on a pilot that aims to enable all investors in a UK mutual fund – institutions and individuals – to exercise choice in how their portion of eligible shareholder votes are cast on the companies in this fund.
Salim Ramji, BlackRock’s global head of iShares and index investments, said that “following years of work on technology and regulatory barriers”, nearly half of clients’ index equity assets – including pension funds representing more than 60m people – can express their voting preferences.
“Our ambition is to make voting choice convenient and efficient for all investors, and we are working with policymakers and industry participants around the world to extend voting choice for our clients,” said Ramji.
BlackRock is not the only firm to enable proxy voting for pooled fund investors. In February last year, institutional platform the Asset Management Exchange – a Willis Towers Watson service – and asset manager DWS, working in partnership with Northern Trust and Minerva Analytics, presented a similar tool.
Chief executive of UK pension provider PensionBee, Romi Savova, voiced her support for BlackRock’s extension of the firm’s tool by saying: “Giving customers the ability to participate in shareholder voting through their pensions is the powerful next step towards our vision to create a future where everyone can have a happy retirement.”
BlackRock said clients have committed $530bn – a quarter of eligible passive equity assets - to voting their own preferences through Voting Choice, noting that in the five months since the programme started, investors representing $120bn of assets have expressed their voting preferences through the tool.
The asset manager has published a white paper, ‘It’s All About Choice’, outlining its ambition to expand the tool to all investors.
