The complex and changing world of fiduciary duty

2017/06/29
The compex and changing world

Summary

The concept of fiduciary management is evolving at time when responsibilities are shifting. At Allianz Global Investors, we believe that it is only through active and on-going engagement, proxy voting and stewardship that we can best protect the interests of investors today and in the future.


Key takeaways

  • Investors have many rights which need to be defended and utilised to their benefit, and for which asset managers have the fiduciary responsibility to fulfil.
  • Asset managers are obligated to meet the full and changing fiduciary duties of investors, providing the opportunity to add value financially and to make a difference environmentally and socially for all.
  • Active investors must act responsibly to hold companies and their management to account for all aspects of strategy, business model and investment.
  • Engagement with companies should combine all the traditional analytical skills of financial and industry analysis with a more diverse set of expertise in areas such as the environment, climate change, pollution, social and other complex governance issues. This engagement can only be consistently and globally fulfilled by active asset managers with substantial research and portfolio management resources, who meet company management regularly thereby creating more of an impact.

“I believe that every right implies a responsibility; every opportunity, an obligation; every possession, a duty“ 1

John D Rockefeller

Fiduciary duty is to provide the highest standard of care to the beneficiary of that service.

There is no one universal definition of “fiduciary duty”. The meaning and the obligations associated with it range across countries and jurisdictions. This ambiguity can be illustrated through the simple comparison of the role of the investment consultant in the US to the UK. In the US, the Employee Retirement Income Security Act (ERISA) states that anyone who exercises discretion over the assets of an investment plan automatically owes a fiduciary duty. As such, not only do trustees owe a direct fiduciary duty, but the actual appointment of an asset manager is also a fiduciary function. Comparatively, UK law does not prescribe such fiduciary obligation which has resulted in some asset managers considering their investor relationships as having fiduciary characteristics, whereas others defining them as purely contractual. Regardless, fiduciary duty of a service provider is determined by a number of statutory, equitable and common law duties which at their core have the obligation to provide the highest standard of care to the beneficiary of that service.

For more information, read “The complex and changing world of fiduciary duty" on allianzgi.com

John D. Rockefeller Jr. Credo displayed at Brown University Library, Providence, RI 02912, (401) 863-2165

Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Past performance is not indicative of future performance. Investments in commodities may be affected by overall market movements, changes in interest rates, and other factors such as weather, disease, embargoes and international economic and political developments. Investments in smaller companies may be more volatile and less liquid than investments in larger companies.

Investments in emerging markets may be more volatile than investments in more developed markets. Dividends are not guaranteed. Bonds are subject to interest rate risk and the credit risk of the issuer. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security.

The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted.

This material has not been reviewed by any regulatory authorities. In mainland China, it is used only as supporting material to the offshore investment products offered by commercial banks under the Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations.

This document is being distributed by the following Allianz Global Investors companies: Allianz Global Investors U.S. LLC, an investment adviser registered with the U.S. Securities and Exchange Commission; Allianz Global Investors GmbH, an investment company in Germany, authorized by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Allianz Global Investors Asia Pacific Ltd., licensed by the Hong Kong Securities and Futures Commission; Allianz Global Investors Singapore Ltd., regulated by the Monetary Authority of Singapore [Company Registration No. 199907169Z]; Allianz Global Investors Japan Co., Ltd., registered in Japan as a Financial Instruments Business Operator [Registered No. The Director of Kanto Local Finance Bureau (Financial Instruments Business Operator), No. 424, Member of Japan Investment Advisers Association]; Allianz Global Investors Korea Ltd., licensed by the Korea Financial Services Commission; and Allianz Global Investors Taiwan Ltd., licensed by Financial Supervisory Commission in Taiwan.

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Integration of climate risks into portfolio strategy

2017/07/13
Integration of climate

Summary

Climate change is all around us – it is a key long-term, systemic and global risk. What can institutional investors do to integrate climate change-related investment risks into their portfolio strategies?