Aberdeen Asset names head of corporate governance

ABERDEEN Asset Management has appointed a head of corporate governance - likely the first such post among fund managers in Singapore.

It believes the extra focus on governance that Mr Peter Taylor will bring can deliver higher returns to investors through better-quality investing on a long-term basis.

Managing director Hugh Young said the firm always practises corporate governance principles when investing, but 'we need more focus and we want to build up our expertise in this area'.

For fund managers, corporate governance does not just mean assessing the quality of the target company, but is also about being a responsible investor.

Many fund managers which hold significant stakes in firms do not attend meetings or cast votes on related issues, so giving companies a free hand to do as they please.

Forming a corporate governance unit or appointing a specific person is already common among pension funds in Britain and the United States. Except for Japan and South Korea, however, the idea has yet to make much headway in Asia.

Mr Taylor, who joined Aberdeen last month, told The Straits Times that one of his roles will be evaluating the corporate governance of companies the fund might invest in as well as assessing the governance of its existing investments. This decision will affect whether Aberdeen increases or sells down its investment.

Another role will mean continuing to be an active participant at shareholder meetings, something Aberdeen is known for.

A third focus - which is likely to be less common - will mean Aberdeen taking a stand on a particular issue where it disagrees with the company. Aberdeen will then take up the issue for discussion with the company.

Such disagreements will be in the contentious area of remuneration or takeover offers which disadvantage minorities.

'When something does happen and requires more involvement, then there is someone to lead the effort,' said Mr Taylor, who will also manage funds to ensure he keeps abreast of the fund managing role.

This is unlike some firms which keep investing separate from corporate governance.

Mr Jamie Allen, secretary-general of the Asian Corporate Governance Association (ACGA), said: 'Traditionally, fund managers have not put a lot of emphasis on corporate governance in Asia.'

One factor could be that some funds invest in many stocks, making it time-consuming to analyse the level of corporate governance for all of them.

Another possible reason is that Asia forms only a small proportion of some fund managers' portfolios.

In a recent AGCA survey of investors in Asia, only eight out of the 22 fund managers who responded had a specific corporate governance unit. Practically none was Asia-based.

Mr Allen said: 'Hopefully, other fund managers will follow Aberdeen's example.'

sushyan@sph.com.sg