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22.0 Introduction

This section covers:

• 

investment manager meetings

• 

investment agreements

• 

investment reporting and

• 

nominee companies or independent custodians.


Comment

Open relationship with investment managers
Trustees should endeavour to have a good, open, working relationship with their investment manager(s). It takes time to build confidence in investment managers (particularly in times when markets are falling) and, following appointment, short-term performance monitoring should be avoided.

Each manager should be set clear performance targets over agreed periods and should be told what will happen if targets are not met.

Investment management agreement

Investment management agreements are required to include the responsibilities, duties and liabilities of the manager, its terms of appointment and termination.

Much standard wording will be included in any agreement but certain sections will need to be personalised, including fee scales; terms for the use of derivatives; the trustees’ policy on socially responsible investment and voting rights; day-to-day service standards; the trustees’ indemnity protection; the manager’s liability and any agreed investment restrictions.

Agreements should confirm the trustees’ investment objectives and any benchmarks for performance monitoring. Mandates between the trustees and investment managers should contain clear timescale(s) for performance measurement and evaluation. Further, contracts for investment advice are expected to be split between advice on strategic asset allocation and advice on fund manager selection. [See 18.8.11]

Investment reporting

Investment reporting will normally involve each manager issuing quarterly investment and accounting reports and performance updates. Ideally, investment reporting should include twice-yearly visits by the manager to the trustees.

Custodians

Where a separate custodian is appointed to look after the scheme’s assets, a written agreement should be in place covering the custodian’s terms of appointment. [See 22.3.1]













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