As described under Principle 1, Fidelity pursues an active investment policy through portfolio management decisions, voting on resolutions at general meetings and maintaining an ongoing dialogue with the management of investee or potential investee companies. Our overarching objective is to deliver investment performance to our clients and in order to do so we seek a long term understanding of all aspects of the companies in which we invest. The intensive analysis which accompanies an initial investment continues throughout and beyond the life of the investment itself.
Fidelity’s investment analysts act as the hub for our communication with companies and they undertake extensive quantitative and qualitative analysis of potential investments. Formal meetings involving both portfolio managers and analysts are held with investee companies at least twice a year and these meetings focus on the drivers of long term performance, although shorter term issues are also relevant in the context of satisfying ourselves that the longer term investment thesis is still intact. In addition to financial and strategic matters, discussion will cover a wide range of related investment topics including, but not restricted to, corporate governance, business sustainability and management motivation.
Meetings are supplemented by an informal schedule of contacts such as site visits and ad hoc calls, and research analysts are also encouraged to develop knowledge of a broad range of industry experts across the value chain in their chosen coverage fields. Research may encompass customers, suppliers, competitors, external industry experts, sell side investment analysts and other shareholders, both directly and through intermediary networks. The investment analysts are responsible for producing most of our company research but for some of our larger holdings this research is complemented by in-depth due diligence reports prepared by senior investment professionals. In addition to internally produced research we also from time to time commission bespoke research from external agencies.
We believe that the more we can learn about our investee companies the better we can hold them to account for delivering on their strategy, and to this end there are numerous internal weekly, monthly and quarterly reviews designed to pool knowledge of our investee companies and to identify opportunities and matters for attention. Individual portfolios are also subject to an in-depth quarterly review with senior management in which every aspect of the fund in question is examined, including risk profile, volatility, performance and fund positioning as well as the individual investments of the fund in question.
Where there are particular issues giving rise to concern or when we want a broader perspective of a company’s business we will often seek meetings with Chairmen and/or independent directors. There is no automatic cycle for meetings of this nature and they take place when there is deemed to be a need for them. Meetings with Chairmen and/or independent directors almost always involve senior portfolio managers in addition to the investment analyst and representatives of the ESG team, and very often contain a strong governance content. In addition to a review of strategy, the proper operation of the Board is a key focus and discussion will cover matters such as Board effectiveness and balance as well as succession planning. Sometimes these meetings are one-off in nature but in other cases we will hold meetings with a particular Chairman and/or independent director on a regular basis until the matter under discussion has been satisfactorily resolved. We will also occasionally ask to see the Chairman of the Audit Committee to discuss audit and risk-related matters.
The ESG team is responsible for the exercise of Fidelity’s votes at company meetings and the ESG team conducts its own analysis of investee companies to determine whether or not they are compliant with our voting guidelines. It is not our usual policy to attend general meetings but if circumstances warrant we will on occasion vote in person and may additionally make a statement explaining our position. In exceptional circumstances we may also submit a resolution for a shareholder vote at a general meeting. Further information on Fidelity’s voting procedures is described under Principle 6 below.
The ESG team also hold their own meetings and calls with companies and these discussions focus primarily on corporate governance and ESG-related topics such as remuneration and Board independence. The investment analysts are encouraged to participate in these discussions so as to ensure that the investment and ESG teams give an integrated message to companies.
As described under Principle 1, the Corporate Finance team resides behind an information barrier and will normally be the first point of contact for any price sensitive information. Whilst the Corporate Finance team may provide feedback on the matter in question, subject to the timeframe of the relevant information it may be shared with the investment team for their review and decision. The existence of an information barrier means that Fidelity is able to accept price sensitive information if a third party deems it necessary for us to do so and we encourage companies to consult with us at an early stage if they are contemplating major strategic or corporate initiatives. Enquiries of this nature should be addressed to Matthew Roberts who can be reached at email@example.com or on (44) 207 961 4631.