1. Recognise that they are in a position of trust managing client money and should act at all times in the best long-term interests of their clients, informing them of possible conflicts of interest and avoiding these wherever possible.
2. Operate within a culture of open dialogue with their clients – building an agreed understanding of investment objectives and risks, which is informed by their investment expertise.
3. Provide information to clients, including information on investment performance, in a way which is clear, timely, useable and relevant to the long-term creation of value in the investee companies, and therefore to clients’ investment objectives.
4. disclose fully all costs that fall on investors in a way that investors can understand.
5. ensure that income generated from lending securities is rebated in full to the fund, with any related costs disclosed separately.
6. adhere to the investment strategy agreed with clients.
7. prioritise medium to long-term value creation and absolute returns rather than short-term returns from market movements when making investment decisions.
8. build an ongoing relationship of stewardship with the companies in which they invest to help improve long-term performance – recognising that engagement goes beyond merely voting.
9. make investment decisions based on judgments about long-term company performance, informed by an understanding of company strategy and a range of information relevant to the specific company, and avoiding reliance on single measures of performance.
10. be prepared to act collectively to improve the performance of their investee companies.
11. be paid in line with the interests and timescales of their clients. Specifically remuneration should not be related to short-term performance of the investment fund or the performance of the asset management firm. Instead, a long-term performance incentive should be provided in the form of an interest in the fund (directly or via the firm) to be held until the manager is no longer responsible for that fund.
Read the next section:
Good practice guide for Company Directors