Voting rights strategy

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Aviva Investors UK Fund Services Limited

Strategy for the exercise of voting rights

Detailed below is a summary of the voting strategies employed on behalf of the collective investment funds (“the Fund(s)”) provided by Aviva Investors UK Fund Services Limited (AIUKFSL).

Some of the assets held within the Funds carry the right to vote on certain matters arising in respect of those assets. For example, where a Fund holds shares in an underlying company, the Fund may have the right to vote in respect of various affairs of the company, such as electing the board of directors, or other events initiated by the company, like mergers or acquisitions, which may have a material affect on the shares issued by the company. 

Voting in this way is important because it is the ultimate sanction by which management are held accountable for their stewardship of the assets into which the Funds invest. Corporate governance, engagement and voting form an integral and active part in managing, protecting and enhancing the long-term value of the investments made on behalf the Funds.

AIUKFSL, in its capacity as Authorised Corporate Director (ACD) of the Funds, is responsible for adopting a voting strategy, taking into account the investment objective and policy of the relevant Fund and potential conflicts of interest, which will determine when and how voting rights attaching to assets held within the Funds should be exercised. 

In practice, however, AIUKFSL has appointed Aviva Investors Global Services Limited and River Road Asset Management LLC* to act as discretionary investment managers in respect of the Funds provided by AIUKFSL. As such, exercising voting rights attaching to assets held within the Funds, on a day to day basis, has also been delegated to the appointed investment managers.

To this end, the appointed investment managers have implemented their own internal strategy for the exercise of voting rights relating to the assets held within the Funds which they manage on behalf of AIUKFSL.

A summary of the strategies employed by the appointed investment managers is provided below.

* River Road Asset Management LLC act as the discretionary investment manager for the Aviva Investors US Equity Income Fund and the Aviva Investors US Equity Income Fund II only. Aviva Investors Global Services Limited act as the discretionary investment manager for all other Funds provided by AIUKFSL.

Aviva Investors Global Services Limited (AIGSL)

Summary of the voting strategy

AIGSL aim to make a positive contribution to the evolution of good corporate governance by taking an active interest in the companies in which they invest and by protecting the rights of shareholders. Companies which are well governed and operate in a responsible and sustainable way should have the culture, attitude and transparent mechanisms in place to support their long-term health and shareholder value. Good corporate governance practice establishes the framework that facilitates the relationship between shareholders and the management of the companies in which they invest, and the voting of ownership rights is an important tool in that relationship.

Summary of approach to voting

The AIGSL Corporate Governance and Corporate Responsibility Voting Policy sets out how AIGSL exercise their responsibilities in this regard, and is available publicly on their website as well as by request. Their Voting Policy is an integral part of their approach to responsible investment, in particular to their stewardship responsibilities.

The Voting Policy covers all funds managed in the UK, and embodies the recommendations of the UK Corporate Governance Code, the International Corporate Governance Network's (ICGN) Global Corporate Governance Principles, and reflects AIGSL’s  commitment to the UN Principles of Responsible Investment and to other national and international good practice guidelines. It is also an integral part of their compliance with Principle 6 of the UK Stewardship Code (“ Principle 6: Institutional investors should have a clear policy on voting and disclosure of voting activity”).

  1. AIGSL exercises its voting rights for the large majority of its holdings globally.  This typically equates to over 4,000 shareholder meetings per annum. Exceptions are in markets such as Brazil, Chile, Hungary and Peru that require Powers of Attorney (PoA), which are costly and cumbersome to produce. Furthermore, they are only valid for one year in some countries. The decision to vote (in PoA markets) is therefore always based on a costs versus benefits analysis of voting for clients. For example, if AIGSL hold a large number of companies and / or has significant stakes in a PoA market, AIGSL would make the necessary arrangements to vote.
  2. AIGSL consider resolutions on their own merits as well as in the light of appropriate policies, standards and good practice. The voting decisions are made in light of the investment objectives and policy of the relevant scheme and of the Voting Policy.
  3. In making voting decisions, AIGSL use governance and other research from a number of sources. They use research for data analysis only and do not automatically follow any external voting recommendations. They believe that subscribing to a wide range of research gives a better and more objective overview of the governance arrangements at companies and enables them to check their own assessments.
  4. If there are sufficiently material concerns, wherever possible AIGSL will engage with companies to explore or resolve issues before voting. Given the number of companies owned within the AIGSL  portfolios, they seek to prioritise engagement where it is most likely to benefit their clients.
  5. AIGSL take their  fiduciary duties to clients and beneficiaries very seriously, and apply a consistent and transparent approach to the management of conflicts of interest. Their principal objectives when considering matters such as engagement and voting are always to act in the interests of their clients and underlying beneficiaries, and to treat all clients and beneficiaries fairly.
  6. AIGSL publish their voting records, and these are publicly available on their website.

Further Information

For further information please see our approach to responsible investment.

River Road Asset Management LLC (“River Road”)

Summary of approach to voting

Policy. River Road Asset Management LLC (“River Road”) exercises discretionary voting authority over proxies issued on securities held in client accounts unless the client has explicitly reserved voting authority. River Road, as a matter of policy and as a fiduciary to their clients, has responsibility for voting proxies for client securities consistent with the best economic interests of the clients. River Road maintains written policies and procedures as to the handling, research, voting and reporting of proxy voting.  River Road has established the Proxy Voting Policy Committee for establishing voting guidelines and reviewing proxy related issues.  River Road’s Compliance Department oversees the operational and procedural aspects of the proxy voting process.  Additionally, to help discharge its duties, River Road hired Glass Lewis & Co. (“Glass Lewis”) as its voting agent. Glass Lewis performs the following services:

  • provides analysis of proxy proposals;
  • tracks and receives proxies for which River Road clients are entitled to vote;
  • votes the proxies as directed by River Road; and;
  • compiles and provides client voting records.

Voting Process. River Road will generally instruct Glass Lewis to vote proxies pursuant to guidelines adopted by the Proxy Voting Policy Committee at the beginning of each year. If the policy recommendation and the management recommendation are different for a particular vote, portfolio managers may choose to vote differently from the policy with respect to a particular proxy based on the investment implications of each issue. In such cases, the investment rationale is documented and prior approval of the Compliance Department is obtained.

Conflicts of Interest. River Road has eliminated most conflicts of interest by using an independent third party (Glass Lewis) that votes pursuant to the guidelines adopted by the Proxy Voting Policy Committee or in accordance with River Road’s direction based on the above process. In cases where River Road believes there may be an actual or perceived conflict of interest, River Road requires additional steps that may include the following:

  1. documenting the potential conflict of interest;
  2. obtaining the prior approval of the Chief Investment Officer or Co-Chief Investment officer and the Chief Compliance Officer;
  3. obtaining Committee review or approval;
  4. deferring to the voting recommendation of a third party;
  5. voting pursuant to client direction (following disclosure of the conflict);
  6. abstaining from voting;
  7. voting reflectively (in the same proportion and manner as other shareholders); or,
  8. taking such other action as necessary to protect the interests of clients.

Further Information

A copy of River Road's Proxy Voting Policies and Procedures and/or voting records can be obtained by contacting AIUKFSL at:

Aviva Investors Administration Office

PO Box 10410

Chelmsford

CM99 2AY

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