Investment body NILGOSC implements pass-through voting method for passive asset management
NILGOSC Adopts Pass-Through Voting in Partnership with LGIM and Tumelo
The Northern Ireland Local Government Officers' Superannuation Committee (NILGOSC) has announced that it will be adopting pass-through voting for its passively-managed equities held within Legal & General Investment Management (LGIM) pooled funds. This move aligns with a growing trend among UK Local Government Pension Scheme (LGPS) funds to adopt more direct engagement and oversight of their voting rights even when investing through large passive pooled funds.
Until now, NILGOSC has relied on LGIM's responsible investment credentials to cast votes according to its own voting policies for passively-managed equities. However, with the partnership between Tumelo and LGIM, NILGOSC can now exercise its voting rights directly, increasing transparency and allowing the committee to actively participate in governance decisions.
Tumelo partners with LGIM to allow the fund manager to pass the vote down to the institutional investor while still accommodating them within a pooled fund structure. This partnership enables NILGOSC to maintain its pooled fund structure while exercising individual voting rights, providing the same flexibility as a segregated mandate.
NILGOSC's CEO, David Murphy, expressed gratitude to LGIM, Tumelo, and Minerva Analytics for helping implement an integrated Pass-through Voting (PTV) solution. Minerva Analytics is one of the partners involved in helping NILGOSC implement the PTV solution.
With the help of this partnership, NILGOSC can onboard institutional investors through Tumelo's digital platform by sending them a link and requesting signup. Pass-through voting allows asset managers to allow their clients to vote at AGMs or special meetings of the public companies whose shares they manage on the client's behalf.
Pass-through voting is a strategy used to strengthen the voice of institutional investors in corporate governance within low-cost passive funds. The goal of pass-through voting is to provide asset owners with greater alignment across their portfolio and a stronger voice in corporate governance. NILGOSC's adoption of pass-through voting comes after a partnership between LGIM and fintech firm Tumelo.
This partnership between the entities is focused on improving shareholder oversight and corporate governance within NILGOSC's investments. Pass-through voting in NILGOSC's portfolio aims to enhance corporate governance and align the interests of the asset owner and the asset manager. Pass-through voting in the context of NILGOSC refers to a mechanism where the pension fund exercises its shareholder voting rights directly in the equities it holds, rather than delegating those rights entirely to the fund manager.
NILGOSC seeks to improve corporate behavior and protect shareholder value by maintaining effective shareholder oversight of the directors and company policies of the companies it's invested in. The committee has already exercised voting rights at company meetings of its actively-managed equity holdings. With the adoption of pass-through voting, NILGOSC is pleased to be able to implement its voting policy across more of its investments.
Pass-through voting is more challenging to achieve in low-cost passive funds, but the partnership between LGIM, Tumelo, and Minerva Analytics aims to make it easier for institutions like NILGOSC to take a more active role in corporate governance while still benefiting from the cost savings and diversification offered by pooled funds. This partnership is a significant step forward in empowering institutional investors to have a stronger voice in corporate governance.
References: [1] "NILGOSC to Adopt Pass-Through Voting in Partnership with LGIM and Tumelo", NILGOSC press release, 2021.
The adoption of pass-through voting by NILGOSC, in partnership with LGIM and Tumelo, will allow the committee to exercise its voting rights directly in the passively-managed equities held within pooled funds, increasing transparency and aligning its decision-making process with corporate governance within business and technology sectors.
By partnering with fintech firm Tumelo, NILGOSC can now use technology to maintain its pooled fund structure while exercising individual voting rights, providing the same flexibility as a segregated mandate, thus strengthening its impact on finance and corporate governance.
