The $35.9 billion Employees Retirement System of Texas (ERS) has altered its allocation boundaries to permit a 10 per cent maximum allocation to cash.

The pension fund for state employees currently holds just under 8 per cent of its assets in cash in a boosted portfolio that taps the benefits of higher interest rates. It  is also a creative response to diversification challenges given the ongoing elevated levels of correlation between stocks and bonds in the current economic landscape.

“It’s not like the old days when it [cash] was dead money,” said Daid Veal, speaking at a recent board meeting, adding that alongside allocating more to cash, ERS is profiting from its bias to long-dated fixed income in a barbell approach.

However, despite “good returns” the cash allocation won’t edge higher because a larger allocation would move away from risk-seeking assets and potentially hinder the fund’s ability to hit its 7 per cent return handle. ERS’s exposure to the correlation in stocks and bonds is also capped because of its return-seeking focus with the portfolio split 80:20 to return-seeking/fixed income respectively.

Latest results have ERS beating passive indexes; peer averages, and the policy benchmark with three-year returns of 9.3 per cent. Veal attributed much of that success to the investment team’s implementation and prudent selection of securities and managers, a key focus at the fund that has helped reverse its fortunes since 2014 when ERS was rated in the third quartile compared to peers. Veal joined as CIO in 2021, but worked at ERS between 2009 and 2012.

“Security selection is the beating heart of what we do,” he said. “Asset allocation is on the margin – although we are investing more in our asset allocation teams, security selection will always be our bread and butter.”

Still, despite this commitment to implementation, internal management at the fund is at its lowest level since June 2020, responsible for around 42 per cent of the assets. Veal said he was doing his “darndest” to hang onto staff in a competitive market.  Texas ERS has a 78-person investment team, recently set up in refurbished offices that make collaboration easier.

Next year the fund will RFP/RFQ seven investment consulting roles, spanning all private market consultants, its general consultant and governance consultant. In November 2024 it will bring those recommendations to the board.

New look public equity

ERS’ commitment to implementation and stock selection is particularly visible in public equity where the fund has just completed a reorganization of the program – an actively managed allocation of which about 70 per cent is managed internally. The portfolio’s recovery is a direct consequence of the team travelling to meet managers; understanding how they conduct their business and add value, and finding the best strategies and securities they can.

The new look allocation is structured around a ‘Lone Star’ core fund which has an overweight to AI and other Magic Seven themes, drug manufacturers and aerospace. A key development in the public equity portfolio includes “materially” reducing the number of stocks by half to 1200 in an effort to increase the quality of companies and prepare for possible sub-par returns ahead.

Around 35 per cent of the portfolio is in public equity and when public equity underperforms, it drags down the entire trust. “In my book, investment is not like a base ball home-run, it’s more like tennis and avoiding making mistakes,” said Veal.

Since the restructuring, public equity has gained 9.7 per cent versus MSCI ACWI IMI Index returns of 8.2 per cent, which represents outperformance of 1.4 per cent (annualized net of fees to the end of September 2023).

In private markets the investment team also attributed performance to implementation and tweaking allocations to ensure the best exposures. For example, the fund’s private real estate allocation is different to its public market exposure, underweight office and with a careful approach to leverage.

Uncertain outlook ahead

The investment team predicts a period of uncertainty ahead, unsure whether the favourable economic environment of late will continue or more extreme conditions lie ahead.  A middle path of economic cooling where the economy also “chugs along” in the context of “elevated volatility” is the most likely outcome.

Much of what lies ahead will be determined by US consumer behaviour and consumption patterns. And despite low US unemployment and high nominal wage growth, the investment team said these trends don’t support more purchasing power.

“Folks’ real purchasing power has not improved,” said John MacCaffrey, senior portfolio manager. “They are making more money, but they are still feeling the cost of living.”

Moreover, because many people depleted their savings coming out of the pandemic, consumer spending is also being funded by debt leading to a spike in delinquencies. “Consumer spending is expected to cool at least in the near-term. This will detract from economic growth but it may also bring down prices and decrease inflation,” said MacCaffrey.

The indebtedness of the US government was another conversation point. Veal voiced his concerns on the level of government spending, adding that government finance is crowding out the private sector and skewing supply and demand with consequences for investors.

Moreover, the Federal Reserve and the market seem to be at odds regarding the future direction of interest rates. The market is expecting five cuts next year (helping fuel recent highs in the S&P)  but Fed guidance points to sustained higher interest rates for longer, indicative of sustained inflation. “Markets are fighting the Fed,” said Veal. “It’s a big disconnect. Are markets right, or is the Fed?”

The board also discussed the drag of missing productivity in the labour market. Although AI might supercharge productivity, it is still unclear how the gains in tech-related productivity might manifest. They noted that the last time the workforce got a significant boost in productivity was when women entered the workforce en-masse decades ago.

Elsewhere, the team flagged that the government’s anti-trust agenda could also pose a threat to the ability of companies to earn profits.

The World Economic Forum’s annual meeting in Davos served as a pivotal forum for leaders to deliberate on the challenges confronting today’s business community. Artificial intelligence was the talk of the town – you would be hard-pressed to walk down Davos’s promenade without seeing “AI” emblazoned on a half dozen storefronts or events.

Beyond main street, the impact of geopolitics was a focal point for corporate and investors alike. In a world grappling with war in Ukraine and the Middle East, US-China tensions, and polarised domestic politics in many countries, business leaders find themselves at the crossroads of global complexities and investment decision-making.

Which begs the question: how are investors assessing and addressing geopolitical uncertainty in their strategies?

The cross-border risk premium has gone up

In discussions with institutional investors from around the world throughout the week, including in FCLTGlobal’s own CEO roundtable event, the overarching trend is one of viewing geopolitics through the lens of risks, commercial, reputational, and organizational. In that sense, the risk premium associated with cross-border investments has witnessed a significant uptick, forcing leading investors and corporates to acknowledge and incorporate geopolitical factors into their decision-making processes. Geopolitical effects are now an inescapable consideration for any new capital allocation decision, with risk management taking precedence over risk avoidance.

Insights from an EY survey of 100 global CEOs highlighted the pervasive influence of geopolitics on decision-making. A staggering 99 per cent of respondents acknowledged this influence, with 40 per cent reporting delayed investments and 37 per cent having to halt planned investments due to geopolitical concerns. This survey underscores the widespread impact and urgency of addressing geopolitical challenges in the investment landscape.

Engaging with governments emerged as a key strategy to assuage geopolitical concerns. While this has been a longstanding practice for corporates, it is a relatively novel pursuit for the investor community. The importance of bridging the gap between geopolitics and global investment through active dialogue was emphasized by participants, recognizing it as a critical component of risk management.

Not all crises are created equal

Each crisis must be assessed based on its strategic importance to the organization or portfolio, demanding the ability to distinguish short-term noise from long-term trends. With conflict in Ukraine, Gaza, and now flare ups on the border of Iran and Pakistan just this past week, sifting through which events require action and which don’t will be a critical skill for investors.

For the last several decades, investment behavior vis a vis geopolitical events has been far more reactionary than anticipatory. This approach was appropriate as geopolitical shocks were mostly temporary fluctuations. Now, there will be structural change to the industry as alliances and alignments are constantly changing shape.

It almost goes without saying that the evolving US-China relationship, which I heard described as a “fall thaw,” is firmly a trend rather than noise; this dynamic has universal implications for the investment community. Fundamental disagreements persist, and while tensions may ease of in the year ahead, the consensus is that cross-border investments will decrease over time. This transition to a multipolar world, coupled with rising protectionism, supply chain realignment, national security investment laws, and increased regulatory scrutiny, adds layers of complexity that necessitate strategic adjustments.

All geopolitics is local

More than 60 countries will hold elections in 2024, and the significance of domestic politics in shaping future policies cannot be overstated. Investors are increasingly recognizing that their home government policies can either exacerbate or mitigate the complexity of operating internationally.

The trends of nationalism and a desire for more autonomy underscore the evolving landscape. In response to these shifts, corporates are strategically reinforcing regional supply chains and adopting a “building local for local” approach, cultivating local supply to cater to local customer bases. The challenges extend beyond politics, with disparate sanctions regimes and climate policies presenting obstacles to scaling decisions across multiple jurisdictions. The inconsistency in governmental approaches to climate, specifically, has emerged as a major variable, with some nations prioritizing ambitious green initiatives, creating investment opportunities in renewables and sustainability. This policy divergence forces investors to navigate varied regulatory frameworks, incentives, and penalties.

As the world witnesses increasing tensions in key regions, the traditional notion of geopolitical events as strictly buying opportunities no longer holds. Such considerations are now inseparable from capital allocation decisions, prioritizing risk management and rendering risk avoidance nearly impossible. As new developments unfold, the ability to distinguish signal from noise will be more critical now than ever before.

Sarah Keohane Williamson is chief executive of FCLTGlobal.

Sweden’s Fund Selection Agency, the government agency charged with procuring and monitoring the funds on offer on the country’s €100 billion premium pension platform has embarked on a re-tendering process that promises a bonanza for global fund managers.

At the start of 2024, the agency will award the first mandates from its inaugural search launched last summer and plans a further six searches totalling €20 billion through the year. It will kick off with €5 billion worth of global and European index funds, likely divided between four to six managers in each category.

Over the next three years the Agency plans 25-30 RFPs that will amount to around $100 billion worth of mandates (the whole portfolio is being re-tendered)  in a concerted effort to raise the quality of the funds, reduce fees and benefit Sweden’s pension savers.

“We will be one of the largest fund investors in the world over the next three years,” Erik Fransson, executive director at the Swedish Fund Agency tells Top1000Funds.com. “We have spent the first year setting up processes, recruiting and making our name known outside Sweden. Our goal is to create the best fund offering possible for our savers by procuring the best products from all over the world.”

Working Swedes have paid into the mandatory DC state pension fund ever since it was established in 2000 and assets on the platform are forecast to double by 2040. Today the entire “premium pension system” accounts for around $190 billion split between the Agency and ($90 billion) default fund AP7 for savers who eschew an active choice.

The overhaul is rooted in a handful of fraudulent and other poorly performing funds on the platform in the past, a consequence of lax requirements on the funds offering their wares – daily liquidity and UCTIS certification aside. In recent years, the number of funds on the platform has dropped from 900 to around 450 in a drive for quality that resulted in many falling away.

Funds that have remained are all being re-tendered, with managers competing for the mandates.  The value of assets under management in the categories won’t change under new management so managers have a clear idea of the amount of assets they will be able to manage from day one if successful, helping the Agency secure the best price.

“We ask a lot of questions, and at the end of the process we conduct a site visit with shortlisted managers to make sure what they have written in their answers is aligned with reality,” says Fransson, describing the new due diligence. “If a fund manager doesn’t have professional Tier 1 clients, the tender process will be time consuming and onerous but if they have done it before, they will find a lot of similarities.”

New mandates

The 25-30 RFPs scheduled over the next three years will include tenders for most flavours of equity, fixed income, target date funds; balanced funds and liquid alternatives. “A lot of our savers are young so there is a lot of equity risk in our savings products,” says Fransson. All funds have a daily NAV, and most will be UCITS compliant.

Fransson believes the drive for fewer, higher quality funds on the platform and a more competitive process will deter managers without a good chance of success from going through the lengthy RFP process. All managers applying pay a tender fee and if they are successful a platform fee, based on assets under management.

“All our costs are being financed by an annual fee of 0.5-1.5 bps of assets under management on the platform.,” he says.

Managers are free to charge whatever fee they want but Fransson hopes competition will drive down charges. Moreover, weeding out weaker managers from the application process means the ticket size of mandates is likely to go up. “Our job is to get the right combination of quality, price and funds offering sustainability on the platform.”

Ensuring choice

Another balancing act involves ensuring enough sophistication in the fund choice alongside selecting strategies based on genuine demand. New strategies include liquid alternatives, but savers choice is also crimped. The platform doesn’t offer access to private markets and some liquid public market allocations are deemed too risky, niche or not suitable for the long-term. “We can’t spend money tendering and monitoring a strategy if clients aren’t interested because it is too expensive or too complex.”

Fransson hopes to reduce the average fee charged across the platform under the new model. But he says the main benefit will come from increasing quality rather than cutting fees. “You can lose a lot more by picking a poorly managed, underperforming fund. Poor performance can end up being more expensive than the difference in fees you might achieve.”

Still, he believes the combination of better performing funds and lower fees could add another 50 basis points onto beneficiaries’ annual return.

“That is a significant number. If we can increase returns by 50 basis points based on $100 billion, we can add a lot of value going directly to the savers.”

The selection process is governed by Swedish law and follows European principles around procurement including equal treatment and transparency, and Fransson has spent the last year and a half honing the process, finding the people and building teams to select funds and monitoring quality and performance.

Still, although it is important to terminate poor quality managers in time, he says the monitoring team are also mindful that even the best managers suffer bouts of poor performance. “It is more than just numbers,” he concludes.

The $171 billion (A$260 billion) Australian Retirement Trust, which sets itself apart from its Australian peers with the identifying investment features of lower infrastructure allocations and less internal management, is looking to opportunities in digital infrastructure and the energy transition.

Head of investment strategy, Andrew Fisher says his biggest concern for this year is whether central banks, particularly the US Federal Reserve Board, can deliver the transition to lower inflation with a soft economic landing.

But he sees digital infrastructure and the transition to a low carbon economy as potential new areas of investment for the fund.

“Digital infrastructure wasn’t a thing five to 10 years ago, but it is possibly the biggest opportunity set we see at the moment,” he says.

He sees the transition to a low carbon economy is another area which will be a “huge opportunity in the infrastructure space and, in an economic sense more generally, over the coming decades.”

Fisher says ART historically had a lower exposure to infrastructure as it was not structurally tied to the $216 billion industry super investment vehicle, IFM Investors.

ART’s Queensland origins have seen it partner in some investments with the state’s sovereign wealth fund QIC, and ART has more money invested in private equity and private debt compared with many other Australian funds.

“There’s a tendency in most of our peer universe to be a little bit more heavily weighted in the unlisted asset space,” he says.  “We have tried to be a bit more diversified. We certainly have large allocations to real assets, but we try to offset that with reasonably sized allocations in private equity and private debt,” he says.  “We’ve probably not moved as quickly and as aggressively into infrastructure as some other funds.”

In a wide-ranging interview with Top1000funds.com sister publication, Investment Magazine, Fisher, who has been with ART and its predecessor fund Sunsuper for more than 13 years, says returns of 8-9 per cent were still possible over the longer term – a much more optimistic scenario than expected given many funds have warned members to be prepared for larger falls in investment returns.

“We have a more constructive forward-looking view looking out than we have had for some time, in terms of expected returns,” he says. “10 per cent is probably high relative to our long term expectations, but 8-9 per cent is not.”

Fisher’s role includes responsibility for managing strategy, asset allocation and investment risk at ART, working closely with the fund’s chief investment officer, Ian Patrick.

He says ART, which has its origins in the merger of major Queensland-based funds QSuper and Sunsuper in 2022 was delivering its returns through a different approach to investing than other funds – including relatively less investment in infrastructure and more in both listed equities and private equity.

Keeping it external 

Unlike some other big industry funds, such as the $310 billion AustralianSuper, ART has no great plans to bring its investment management in-house beyond the current level of around 36 per cent, despite the fact that it is now the country’s second-largest fund.

“It is always something we will always question [whether to take more investment in-house], but we are not necessarily thinking of doing more today,” he says.

“At a certain size and scale there is arguably less benefit to internalisation in some areas because you are so big, you can’t be active.”

“I think our reticence, or lack of enthusiasm for internalisation, relative to some other funds probably gives us a bit of an advantage in terms of being quite tactical around where we think internal management will work best for us and our members.”

“We’re much more focussed on building the best external partnerships we can, and using them in the best ways we can, as opposed to the prioritisation of internal management just for the sake of being internal.”

Some industry fund chief investment officers have argued that one of the benefits of internalisation means funds are approached at an earlier stage about coming into big deals, potentially on more attractive terms.

But Fisher points out that the two funds which formed ART were invited to be part of two major deals – QSuper in the $25 billion bid for Sydney airport and Sunsuper in the $10 billion takeover of AusNet – in 2021, before the merger went ahead in February 2022.

He says the two deals were so large that they were not ones which ART would consider doing on its own these days despite its larger size.

“If you think about our participation in the [Sydney airport] consortium- even if we doubled our participation, we would not be doing it on our own.”

Fisher says the increasing size of the fund has meant that ART is being approached with “a different style of inbound inquiry” on potential investment deals.

He says ART was willing to work with external managers including paying the higher fees needed to invest in private equity.

“We certainly don’t like paying fees, but we think we can be adequately rewarded for the fees we are paying. We think that diversification is worth it.”

ART has about 51 per cent of its assets in equities, a factor which was behind the 10 per cent returns it was able to deliver in 2023 for its balanced option.

This helped counter the writedowns in commercial office blocks last year which occurred at ART and most of the rest of the super fund sector.

Fisher says the returns of 2023 had come in higher than expected because of the stronger than expected performance of equities.

“Equities have outperformed a lot of people’s expectations,” he says. “We have underestimated the capacity for equities to be a reasonably good inflation hedge. We have underestimated the capacity of earnings to capture inflation and offset [inflation].”

Origin story

ART’s different approach to investing to some other industry funds was highlighted in its decision to vote in favour of the bid for Origin Energy by Canadian investment giant Brookfield Asset Management and its US partner, last year.

But its support was not enough to see the deal go through following strong opposition by AustralianSuper, which boosted its stake in Origin to 17 per cent, with its vote supported by several other industry fund investors.

This meant the bidders were unable to garner the 75 per cent of shareholders to succeed despite the support of the Origin board. (Origin’s shares have continued to trade below the offer price since the bid was rejected.)

ART did not make its view on the bid known before the vote, in contrast to AustralianSuper which actively opposed it, staying out of the public arena during the bid where its voice could have been influential had it chosen to speak out.

“It’s a matter of public record that we did vote in support of the bid,” Fisher says.

“It was our view that it was in the best interests of our members to accept the offer. We thought it was a good price,” he says. “But these things happen all the time- some takeovers get up and some don’t.”

Fisher says ART is “relatively neutrally positioned in equities” at the moment.

“There’s always reasons not to want to invest in equities,” he says. “But (at the moment) we are not underweight, we are not overweight [in equities]. What we are increasingly focussed on is trying to be as diversified as possible. If you take bond yields for example, they seem relatively evenly poised. They’re probably a little bit lower than we think is fair but not low enough to take a position on it.”

He says ART’s appointment of former Australian Reserve Bank deputy governor Guy Debelle as an external adviser to its investment committee in March 2023 was an example of a high-quality personnel investment the fund could make given its larger size.

Debelle has had a long interest in the economics of climate change and green energy, leaving the Reserve Bank in early 2022  to join Andrew Forrest’s green energy arm, Fortescue Future Industries.  He left the full-time role at FFI a few months later and the FFI board last year, and is now a company director and adviser specialising in green energy.

Fisher says the global economic outlook is “delicately poised in terms of whether inflation is well and truly finished or not.”

“There is certainly a growing body of evidence that the inflationary challenge is under control, particularly in the US,” he says. “The concern we have is that there is still a sizeable elevated geopolitical uncertainty around the world.  It doesn’t take much for something to happen to create some sort of supply side impact on inflation. We are seeing it now with regards to shipping costs.”

His biggest concern for this year is whether central banks, particularly the US Federal Reserve Board, can deliver the transition to lower inflation with a soft economic landing.

“Soft landings are really hard [to engineer],” he says.  “The Fed has done a really good job to this point, but the US is still facing a difficult election year, an insane fiscal situation. I don’t think it will be as easy as the market thinks for the Fed to deliver a soft landing in the next 12 months.”

Arizona State Retirement System (ASRS) the $50 billion pension fund for some 600,000 public sector employees in America’s Four Corners region, will opportunistically increase both US and international public equity exposure in line with its moderately bullish view on public equities and a new strategic asset allocation that targets 44 per cent of AUM in the asset class.

The global public equity allocation is mostly passive in line with a belief in the efficient market hypothesis. However, the investment team does introduce marginal enhancements to index weights and takes advantage of trading opportunities within the tactical asset allocation in what executive director Paul Matson calls “enhanced passive”, that isn’t a fundamental approach but still seeks to add small, incremental returns where possible. The strategy has helped the fund achieve a 10-year return of 8.45 per cent, amongst the top 6 per cent of US public funds.

Similarly, ASRS’s public fixed income allocation (with a target range of between 3-12 per cent) is also passive but “enhanced” by marginal duration and credit decisions. All US equities and two-thirds of the bond allocation (around one third of total assets) are managed in-house where strategy is driven by a “house view” on capital markets.

The development and articulation of macro views on interest rates, corporate spreads and asset valuations ensures consistency among investment decisions, clarity of direction, baselines for debates, and conformity of understanding, Matson, a Canadian native who joined ASRS as CIO in 1995, tells Top1000funds.com.

“Portfolio managers should understand macro level fund management issues,” he says. “Judgement counts; it is more than just data, and most common practice is typically and harmfully confused with best practice.”

MANAGING overweight in Private markets

ASRS’s risk-on strategy runs alongside a similarly large portion of AUM (around half the total fund) in private markets where Matson is currently tweaking the pacing program in a bid to decrease over-allocations.

Costs in private markets are kept low by focusing on relationships with a smaller number of highly qualified managers. Investment is shaped around bespoke separate account partnerships at reduced fees that also come with custom investment criteria and favourable liquidity terms. The approach gives ASRS rights to influence or determine the pace of investment and liquidation of the partnership, he says.

ASRS views all management fees, carried interest, revenue sharing, transaction spreads and commissions under the umbrella of “market frictions.” Combined, they can be significantly detrimental to investment performance, and as a result transactions are only based on the conviction that they will increase investment returns or decrease risks net of all market frictions.

“The key things we consider when investing in private markets include sector/style allocations, quality of management, organizational structure, liquidity, terms, and limited partner rights,” he lists.

Matson has built the organisation’s culture around both consistency and agility, and says he’s comfortable diving into whatever comes up across the 11-person investment team; customer service or governance.

“My role is multi-faceted, consisting of investment management from all angles and views, actuarial analysis, cyber oversight, cost containment, customer service, and governance. One of the most interesting parts of this is the opportunity to integrate all of these into a consistent organizational culture. Working with agile colleagues is fun!”

Other key leadership priorities include ensuring the production of all research and reports is always fed into decision-making. And he’s just as mindful of not wasting time in decision-making as he is managing resources or talent. Communication, he says, should be “concise and affable” and he insists all senior executives (outside the investment team) also understand how the various portfolios work and integrate.

Asset owners collaborating to influence labour rights in investee companies have another string to their bow with the release of the Committee on Workers’ Capital report examining large fund manager voting performance.

The report, designed in part to help investors hold fund managers to account, looked at 13 resolutions in the 2023 proxy voting season examining the number of supported resolutions, as well as the consistency and transparency of behaviour in manager proxy voting. For example only three of the asset managers examined, Blackrock, LGIM and UBS Asset Management, actually disclosed their proxy voting rationale.

One clear result was the disparity in the behaviours of the US versus non-US fund managers, with the report acknowledging the drivers of that behaviour including the regulatory differences.

The largest five asset managers, all headquartered in the US – Blackrock, Vanguard, Fidelity, SSgA, JP Morgan – demonstrated low support for proxy votes related to fundamental labour rights in 2023. But the non-US cohort that was examined – Amundi, LGIM, UBS, DWS Group, SUMI Trust – voted in support of the proxy votes most of the time.

Hugues Letourneau, associate director of the CWC said the large shareholdings these firms have in the S&P500 meant it was essential for asset owners to engage their managers on labour rights. And he said the influence of managers is increasing, demonstrated by the AUM of the largest fund managers growing by 150 per cent in the 10 years since 2013, compared with pension assets in OECD markets which has grown by 46 per cent in that time.

“We do think when a large shareholder votes against a resolution it makes it easier for a company to turn around and say ‘our top 10 shareholders don’t care about this’,” he said. “It makes it easier to sweep it away. We want asset owners to share this report with managers and ask them what they are doing on the key issues we raise in the report.”

One of the resolutions examined was the freedom of association resolution at Amazon.com, co-filed by Canadian pension fund BCI, marking the first time a Canadian pension fund has filed a labour rights resolution according to Letourneau. About 20 per cent of Amazon is owned by Vanguard, BlackRock, SSgA, Fidelity Investments, and JP Morgan Asset Management.

In this case two asset managers, Blackrock and JP Morgan AM, demonstrated uneven and confusing shareholder engagement escalation pathways. They disclosed that they had been engaging with Amazon on social issues since January 2022 and yet they didn’t vote on that resolution.

The Amazon case also demonstrated an example of split voting with JP Morgan AM voting differently depending on its funds. In the case of both Amazon.com and Netflix shareholder resolutions the JP Morgan Large Cap Growth Fund voted against both resolutions, and the JP Morgan Sustainable Leaders Fund voted for both resolutions. Letourneau said this demonstrates the important role of ESG teams within fund managers to coordinate messaging and voting positions.

Letourneau is also the founder of the CWC Asset Manager Accountability Initiative, convening asset owners from around the world to engage with global asset managers on investment stewardship practices.

In the past two years it has brought groups of 15 asset owners from around the world to directly engage together with fund managers, including Macquarie, UBS, SSgA and Blackrock, in structured clients meetings. It has a scheduled meeting to discuss labour rights with Blackrock this February.