The UK Stewardship Code - Compliance Statement

May 2017

We take a long term in our approach to investment and see adherence to the UK Stewardship Code as an important part of the overall approach to investment management at.

The Financial Reporting Council (FRC) encourages all UK institutional investors to publish a statement on their website of the extent to which they have complied with the Code, containing a description of how the principles of the Code have been applied and disclosure of specific information.

Code principles

Principle 1

publicly disclose their policy on how they will discharge their stewardship responsibilities.

CAM adheres to the Stewardship Code by undertaking voting on company proposals, engaging with companies and monitoring of stewardship responsibilities to outsourced investment managers and funds in proportion to its size as an asset manager and to its position.

Where CAM makes active investment management decisions to buy companies, it monitors management on a regular basis and engages when appropriate. An example might be to discuss the merits of moving from a junior market to a main London Stock Exchange listing to enhance coverage and liquidity, albeit that this would involve further listing requirements and expense. It may also be appropriate to engage with a company if CAM considers it may be in the best interests of investors for a company to be wound up rather than continue trading.

The investments bought by CAM are either recommended by an external consultant, who has conducted extensive due diligence before recommending them to us, or are chosen by the our in-house investment committee that meets to establish investment policies for strategy and stock selection and to CAM has appropriate governance policies in place, including a voting policy. If CAM became concerned about governance within the investment or had other concerns, it would have the option of engaging the external consultant to work through these concerns with the company. If it was not satisfied with the response, CAM would look for another investment that did have the appropriate policies in place.

When CAM outsources some stock selection to an external manager or expert, that person is bound by their investment mandate to follow the investment objective as defined by CAM and to follow appropriate policies and procedures. This includes reporting from time to time on voting and engagement.

CAM does not engage with the managers of passive funds in which its funds are invested. However, it would expect these managers to engage and vote in line with the policies laid out on their respective websites in terms of engagement, sustainability of financial performance over the long term as well as providing insight into environmental, social and governance considerations where possible. If we were particularly interested in a governance issue with any stock which was also held in a passive fund, it may be appropriate to engage with the fund manager to coordinate engagement activities. When CAM buys stocks to create passive stock baskets, the voting responsibility remains with CAM and in these instances, CAM implements its internal voting policy, which is to vote in line with management unless there are compelling reasons to vote differently.

Being a signatory to the Stewardship Code means adhering to its principles and, further, means keeping updated on developments in environmental, social and governance issues. Incorporating these issues into the existing investment process and sharing them with the wider investment committee that advises CAM on investment policy helps the us to make better informed decisions.

Principle 2

Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.

CAM regularly reviews and updates its policy for new conflicts that may arise and to improve procedures. CAM has identified areas where conflicts of interest may arise. An example is the receipt of sensitive information. Due to the nature of the investments CAM makes, it is unlikely this will be a frequent occurrence and any such information is reported to the Compliance Officer.

Other examples of conflicts of interest with respect to the funds we invest in from time to time are situations where a hostile takeover takes place and when the funds hold investments in both companies, the target company and the acquiring company, and/or situations where both equities and bonds are held and the interests of equity holders are in conflict with the bond holders.

In all situations, the overriding purpose of the CAM investment stewardship policy is to protect and enhance the economic interests of our clients, so the conflict is settled by reference to the clients’ best interests. If this does not produce a satisfactory outcome or if there is a conflict that falls outside the terms of reference of the policy, the Conflicts of Interest Committee will convene to resolve it.

Principle 3

Institutional investors should monitor their investee companies.

When companies are held actively, we monitor the companies to ensure that capital is being deployed effectively, that the long term outlook remains valid and that the company is following this strategic direction in an effective manner. All data is monitored closely by us to assess whether companies are keeping to their investment objectives, performing in line with expectations and in line with peer groups. The CAM investment committee meets regularly to discuss current strategy and performance and any issues that may have arisen with the investments we make. While the monitoring of active managers (were employed within a portfolio) is clearly very important and there is very regular contact, the passive funds within portfolios are also monitored for performance with attention paid if funds do not appear to be tracking their benchmarks closely enough.

CAM would engage with companies if there were concerns about performance, value risks or management or corporate governance concerns. Similarly, if there were concerns about a company within one of the funds, CAM would ask the fund manager to engage with the company on its behalf.

On very rare occasions, CAM might consider becoming an insider. However, engagement without being an insider would be the preferred route. CAM is aware of the risks of becoming an insider and has procedures and policies in place, which mean that such dialogue is kept out of the public domain and registered with the compliance department. The information then remains only between the manager with the information, the compliance department and the company until the matter is in the public domain.

Principle 4

Institutional investors should establish clear guidelines on when and how they will escalate their stewardship activities as a method of protecting and enhancing shareholder value.

CAM is a very small asset manager; consequently the opportunities for us to intervene or escalate stewardship activities are fairly limited. If we had concerns about a company held in one of our portfolios in terms of its performance, governance, remuneration or approach to risk, we would attempt to enter into an active dialogue with the company concerned. We may also contact one of the company’s directors; in strict confidence. CAM may then use our clients’ votes to address our concerns voting against management. Occasionally CAM may share concerns with other shareholders as this may have a more effective outcome than acting on our own. Following engagement with the company, if we still had concerns, it might be appropriate to sell the investment in such circumstances.

Engagement with companies held in passively run portfolios is not undertaken.

Principle 5

Institutional investors should be willing to act collectively with other investors where appropriate.

Where CAM believes it is in the interests of its clients, CAM will participate in collaborative engagement activities. Collaborative engagement may be more appropriate than acting alone in certain instances; such as, but not limited to, during times of significant corporate or wider economic stress, when the risks posed threaten the ability of the company to continue, and where CAM’s shareholding may not be sufficient to exert influence alone.

The contact for such collaborative engagement will usually be one of the CAM senior investment team.

Principle 6

Institutional investors should have a clear policy on voting and disclosure of voting activity.

CAM seeks to vote all shares held actively and passively where voting rights are held. In so doing, CAM takes into account the UK Corporate Governance Code and other international guidance on governance when voting such as board structure, remuneration and shareholder rights seeking to vote with management unless we are dissatisfied by a company’s adherence to these governance codes. Votes against management and abstentions are recorded with notes where appropriate.

The policy on disclosure of voting activity is to make records available on request to clients who wish to see it. The number of clients who make such request has been very few; consequently, this has been a satisfactory way to manage the voting reports. If the number of requests to see the voting record were to increase, CAM will consider moving to half yearly or even quarterly reporting.

Where stocks are held in funds the fund manager is responsible for voting the shares; but, if there is an issue about a company proposal that CAM believes contravenes the code, CAM would communicate this to the portfolio manager. When CAM outsources stock selection to an external manager it has policies and procedures in place governing what is expected from the external manager in terms of voting and governance activity. The manager reports to CAM with regular updates on governance activity.

CAM does not use an advisory service to recommend how to vote. It considers that, by undertaking this activity using internal resources, it better reflects CAM’s governance views rather than by taking an external advisor’s recommendation with which CAM may disagree. This may change if the internal resource at CAM is insufficient to expedite the voting in line with CAM’s governance objectives.

Principle 7

Institutional investors should report periodically on their stewardship and voting activities.

CAM reports to clients on stewardship and voting activity, when requested however currently this process is infrequent given the firm has only just been incorporated. CAM believes that this may change now that the Stewardship Code is becoming better known and more asset managers are signatories, and as its own business develops. If there is an increase in demands from clients to see the records of stewardship and voting activity, CAM will endeavour to produce a frequent reporting schedule. Currently CAM reports back to clients if they request a copy of the Stewardship Code or ask about frequency of voting.