The FRC published their overhauled investor UK Stewardship Code 2026 in June this year and seemed to ignore our simple request for the Code to require fund managers to engage with the beneficial owners of their funds
The new UK Stewardship Code 2026 defines Stewardship as ‘the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries’. It’s not a bad definition but the Code allows fund managers to ignore their clients and beneficiaries as it does not require them to annually report on how they have engaged with clients and beneficiaries and what outcomes came from these engagements.
This lack of engagement with investors in funds is supported by the FCA’s regulations for funds, which allow fund managers to get investors in their funds to opt out of annual general meetings (AGMs). This is effected by a fund’s AGM getting its shareholders at the time of the AGM to vote for a resolution on not having AGMs subsequently/in the future. Such funds are usually open-ended and the shareholders voting for this not having AGMs will not necessarily be the shareholders of the future. The regulations don’t even require any review of this position every so often and a confirmatory general meeting vote to continue the policy.
Considering that the Investment Association’s numbers indicate that UK investors had around £1.5 trillion invested in funds at the end of June this year, it seems odd that the industry is allowed to keep their investors/beneficiaries at arm’s length or, as we suggest, out in the cold. The UK Stewardship Code 2026 could have gone some way to rectify this situation.
