The FCA has stated that all firms that manage investments for professional clients should produce a statement of commitment to the Stewardship Code or explain why it is not appropriate.
SG Kleinwort Hambros is a private wealth manager and investment manager and our clients are predominantly retail clients under FCA rules. Retail clients are not covered by the terms of the Code. A small number of clients are classified as Professional clients under the rules, and their portfolios are managed within the terms of our standard services.
Whilst we recognise our responsibilities that come with the stewardship of client assets, we do not believe that the purpose of the Code was to encourage firms like Kleinwort Hambros to attempt to manage the affairs of our investee companies.
The steps we have taken to comply with the Code are detailed below:
Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities.
SG Kleinwort Hambros does not have a specific policy on how we will discharge our stewardship responsibilities. Our policies and information regarding voting is included within our Terms and Conditions, which are provided to all clients. Kleinwort Hambros is not a listed company, therefore the UK Corporate Governance Code is not applicable.
Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.
SG Kleinwort Hambros has a policy for managing conflicts of interest. A summary of this policy is available to all clients.
Institutional investors should monitor their investee companies.
SG Kleinwort Hambros has an Equity Research team which actively monitors the companies that are on our list of investments approved for purchase for our clients.
Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value.
Where SG Kleinwort Hambros’s shareholding in a company is significant enough to warrant attention from the company, and where there is a specific concern around a company’s strategy or performance, then the Chief Investment Officer may decide to engage with the company. The individual circumstances of each situation will determine the chosen method of intervention.
Institutional investors should be willing to act collectively with other investors where appropriate.
Kleinwort Hambros may work with other investors when we consider it appropriate to do so. Although there is not a specific policy with regard to collective action, we would expect to engage with other investors when it is clearly in the best interests of our clients. At such times, we would also pay close regard to our policies on conflicts of interest and on insider information.
Institutional investors should have a clear policy on voting and disclosure of voting activity.
SG Kleinwort Hambros does not have a defined policy on voting. Our Terms and Conditions detail how we deal with voting. These state that we may vote if the assets are held under the Discretionary Investment Management service. However, if the clients’ assets are held under other services, then (other than for Extraordinary or Annual General Meetings) we will take reasonable steps to seek and will act upon timely instructions from clients. We would not, however, generally disclose details of our voting history. This is due to the diverse and predominantly retail nature of our client base. The combination of discretionary and advisory services may mean that on occasion we have some clients voting in favour and some voting against any particular resolution at any given time. This could give rise to unnecessary confusion to the public or the media.
Institutional investors should report periodically on their stewardship and voting activities.
Kleinwort Hambros does not report periodically on stewardship and voting activities. This is because our client base is predominantly made up of retail investors. Each client has either one or both of a Relationship Manager and an Investment Manager, whose responsibilities are to understand the client’s particular circumstances. The Investment Manager will be regularly reviewing the portfolios of the discretionary clients and will report on all investment activities within the portfolio. For non-discretionary clients, there is communication between the Relationship and/or Investment Manager and the client before any investment decisions are made. Our clients would therefore not need these reports.