STEWARDSHIP CODE
Stewardship is defined 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.”
Under COBS 2.2.3 of the FCA Handbook, we are required to make a public disclosure in relation to the nature of our commitment to the Stewardship Code, which was published by the Financial Reporting Council (‘FRC’) in July 2010 and amended in September 2012 and January 2020. Where we do not commit to the Code, we are required to disclose our alternative investment strategy.
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. The FRC recognises that not all parts of the Code will be relevant to all institutional investors and that smaller institutions may judge some of the principles and guidance to be disproportionate. It is of course legitimate for some asset managers not to engage with companies, depending on their investment strategy.
The Code does not prescribe a single approach to effective stewardship. Instead, it allows organisations to meet the expectations in a manner that is aligned with their own business model and strategy. The investment market has changed significantly since the publication of the first UK Stewardship Code. There has been significant growth in investment in assets other than listed equity, such as fixed income bonds, real estate and infrastructure. These investments have different terms, investment periods, rights and responsibilities and signatories will need to consider how to exercise stewardship effectively in these circumstances. Environmental, particularly climate change, and social factors, in addition to governance, have become material issues for investors to consider when making investment decisions and undertaking stewardship. The Code also recognises that asset owners and asset managers play an important role as guardians of market integrity and in working to minimise systemic risks as well as being stewards of the investments in their portfolios.
There are twelve “Apply or Explain” principles for asset owners and asset managers:
- Purpose, strategy and culture
- Governance, resources and incentives
- Conflicts of interest
- Promoting well-functioning markets
- Review and assurance
- Client and beneficiary needs
- Stewardship, investment and ESG integration
- Monitoring managers and service providers
- Engagement
- Collaboration
- Escalation
- Exercising rights and responsibilities
Whilst the Firm supports the principles underlying the Code it does not currently comply with the Code for the following reasons:
Alltus Capital (UK) LLP does not currently comply with the Code because its investment focus involves Japanese investments, and as such, it does not currently invest in UK listed companies. Therefore, although the firm supports the objectives set out within the Code, the provisions are not deemed to be relevant to the type of investment strategy currently undertaken by the firm. Should any material changes occur to our strategies which would make the Code relevant, we will review our commitment to the Code at that time and make appropriate disclosure.
Alltus Japan Fund is a Short and Long Absolute Return Hedge Fund for Alltus Capital (UK) Limited and its direct and indirect subsidiaries.
Investments involve risk. Past performance is not a reliable guide to future returns. The value of investments can fall as well as rise. Investors may get back less than invested. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation.
The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information.
Alltus Japan Fund and its affiliates do not accept any liability for losses either direct or consequential caused by the use of this information. The views and information discussed herein are as of the date of publication, are subject to change and may not reflect current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general.
Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. This document does not constitute investment advice or an offer to provide investment advisory or investment management services, or the solicitation of an offer to provide investment advisory or investment management services, in any jurisdiction in which an offer or solicitation would be unlawful under the securities law of that jurisdiction. This document may not be reproduced in any form or transmitted to any person without authorisation from the issuer.
This document is issued by Alltus Capital (UK) Limited, which is authorised and regulated by the Financial Conduct Authority (“FCA”), FRN 600943. In the UK, this document is only made available to professional clients and eligible counterparties as defined by the FCA. Under no circumstances should this document be forwarded to anyone in the UK who is not a professional client or eligible counterparty as defined by the FCA. This document has not been reviewed by any regulatory authorities.