30% jump in shareholder voting - how can you vote in upcoming investment trust AGMs?

Scottish Mortgage, Schroders Capital Global Innovation Trust and BlackRock Smaller Companies Trust are amongst the investment trusts holding annual general meetings this month, giving investors a chance to exert influence over the running of the investment vessels.

The number of investors voting at AGMs has jumped 30%, according to data from fund platform interactive investor. The number of votes on the platform rose from 162,673 in 2021 to 210,801 in 2022 as investors gear up to have more of a say in the companies they hold.

While participating in AGMs is more commonly associated with large institutional investors, a growing number of retail investors are opting to have their voices heard by major companies by voting on resolutions put forward at meetings.

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Votes on boardroom pay, business governance, sustainability targets, as well as motions put forward by activist investors, are just some of the areas retail investors can cast their votes on.

With AGM season underway, we look at when you can vote at AGMs, how to do it and why you should.

As a shareholder, you may be able to vote on things like boardroom pay or the running of a company - here’s what you need to know.

What investment trust AGMs are coming up this month?

There are a number of upcoming AGM dates for investment trusts to be aware of where you may be able to vote.

Kyle Caldwell, collectives specialist at interactive investor, said: “Investment trust AGMs are a fantastic opportunity to hear from managers and boards, and – if necessary, hold them to account, even if the resolutions on the table are, more often than not, ‘business as usual’.”

He points to trusts’ independent board of directors as being a “key structural advantage” of investment trusts. “This includes oversight of managers themselves, and ultimately helping to look after the interests of shareholders (such as by driving down costs),” he adds.

“Many individual shareholders may feel their vote will not make a difference, but there is strength in numbers; if increasing numbers of investors engage and use their votes, it will result in private investors having greater influence over time,” he says.

Scottish Mortgage: 27 June

Scottish Mortgage Investment Trust is one of the standout names within the investment trust space. Having posted a decade of market-beating returns, shareholders will have a chance to voice their concerns over the trust’s recent slump. Caldwell says managers of the FTSE 100 listed trust will be “bracing for some tough questions from its shareholders given it reported a share price loss of 33.5% in its latest annual results (to 31 March 2023).”

Votes will be held on re-electing directors and electing two new directors, as well as approving a final dividend of 2.5p per share, all of which should ease through.

Middlefield Canadian Income: 1 June

One of the only closed-ended funds offering investors country-specific access to the Canadian stock market, the trust is geared to take advantage of Canada’s booming population growth with positions in residential and commercial property.

It has maintained an annual dividend of 5.1p per share since 2017 - shareholders will have a chance to approve the dividend policy next month.

BlackRock Smaller Companies: 20 June

The UK small-cap trading trust was dealing close to its net asset value (NAV) at the start of 2022, but its shares are now trading at around the widest levels seen over the past decade.

Two resolutions are of note: one is on an increase to directors’ maximum fees payable to the trust’s board of directors, and the other is on approving the trust’s buyback mechanism, which it uses to manage its discount.

Caldwell says there may be “disgruntlement” over a proposed increase to the annual maximum fees payable to the trust’s board of directors from £200,000 to £250,000.

Schroder UK Public Private Trust to Schroders Capital Global Innovation: 21 June

Formerly known as the Woodford Patient Capital investment trust and recently re-branded from Schroder UK Public Private Trust to Schroders Capital Global Innovation, this growth capital-focused portfolio has been up against it in recent years. The shares are down 45.8% on a total return basis over the past three years.

Shareholders have an important decision to make next month - whether to give the go-ahead to a continuation vote in two years’ time - which itself acts as a vote of confidence in the fund managers’ performance.

There is a chance the upcoming vote could be the start of the end for the trust.

“If the continuation vote is approved, and performance does not turn around in the next two years, its days may well be numbered,” Caldwell says.

Vietnam Enterprise Investments: 23 June

A strengthening dollar has led to a tough 18 months for emerging markets like Vietnam and shareholders in this country-specific trust, managed by Dragon Capital, face a decision to make over share buybacks to manage the trust’s discount.

Dates for the diary: investment trust AGMs in June

Who can vote at an AGM?

Anyone who owns stock in a company can vote in its AGM. Typically, each shareholder has one vote per share, meaning that larger investors, such as pension schemes, often hold more sway over key decisions.

But for retail investors, utilising your voting powers can be an important factor in having a say in how the company is operated. Whether it’s voting on your individual feelings or as part of a broader collective decision, it is worthwhile to make the most of your shareholder voting rights.

Richard Wilson, chief executive of interactive investor, says private investors can have a “powerful collective influence over a company’s conduct and future direction through their vote, should they wish to use it”.

How can I vote at an AGM?

There are a number of ways for investors to vote at an AGM.

Shareholders can attend the meeting in person or virtually, depending on the arrangements of the specific meeting, but you can also cast votes early by proxy or through an online portal.

A company will normally publicise when and where its meeting will be held through what is known as ‘notice of AGM’ and this is communicated to fund platforms. To attend the meeting, you must get a hold of an attendance card from the platform which you may have to request from the platform you invest with.

The meeting itself will often include a rundown of the accounts, a presentation of the annual report and a chance to pitch questions, ahead of the resolution voting.

But not all shareholders will be able to attend the meeting, and as such, companies and platforms have several ways to allow shareholders to cast their votes.

Proxy voting involves an individual voting on behalf of another shareholder, meaning they do not need to physically attend the meeting to vote. The shareholder will communicate their preferences to the proxy ahead of time. The company will share specific details about how this is carried out, but it typically involves a postal or online form.

How are fund platforms helping investors to vote?

Increasingly, fund platforms have sought to increase AGM participation by improving access, such as in-app voting and reminders of upcoming meetings.

In 2021, interactive investor made customer shareholder notifications for UK-listed securities opt-out, rather than opt-in, removing a major barrier to retail investor participation.

In January this year, Hargreaves Lansdown unveiled its online platform for AGM voting, allowing investors to have their say on resolutions put forward to UK and European companies

Such services offer retail investors “a greater say in the governance of the companies in which they hold shares and the democratisation of markets,” according to Tom Lee, head of trading proposition at Hargreaves Lansdown.

“Retail investors are taking a keener interest in having the power to influence corporations on important issues such as board diversity, climate change and sustainability,’ he adds.

In recent years, collective action has driven change at some of the largest companies in the world. Oil giants such as BP and Shell have come under pressure in recent years from shareholders and activist investors who want more action to be taken on climate-related resolutions.

Which platforms allow you to vote at AGMs and how?

When you invest in shares through an investment platform, you, in most cases, do not become the owner of the shares - instead, you become the beneficiary. This can complicate how you vote at AGMs.

Adding to the complexity are the differences in how each platform goes about managing your votes.

Here is a rundown of the major platforms and how you can take part in AGM season

interactive investor

You are notified if you are eligible to place a vote via its ‘voting mailbox’ service online. You then log into the accounts and cast your voting preference.

Hargreaves Lansdown

You will need to get in contact with Hargreaves Lansdown by phone, email or through the secure messaging system to let them know that you wish to vote on and how.

AJ Bell

Similar to Hargreaves Lansdown, AJ Bell customers must get in touch with the platform. You must use the secure messaging service to state how you would like your vote to be cast.

Barclays Smart Investor

Barclays Smart Investor offers some online voting for high-profile companies, but typically, you must call the customer helpline if you are an individual looking to vote.

Fidelity Personal Investing

Fidelity offers a voting service through a third-party provider, Broadridge.You need to sign up for the service and will then be notified of any upcoming votes you can take part in.

What were the most voted shares last year?

According to ii, these were the most voted shares in 2022 by private investors:

• Lloyds
• BP
• GSK
• Aviva
• Vodafone

Lee Wild, head of equity strategy at interactive investor says it is the role of platforms to continually encourage” investors not to be put off by the misconception that their vote does not matter.

“Their voice can, and often does, make an impact. In fact, the more they use it, the more power it has. It’s ultimately a win-win, because by attending an AGM, voting, and raising questions, you’re not only helping build the collective strength of private investors’ voices, but you’re also simultaneously deepening your understanding of the business you’re invested in.

“And, as previous years have shown, these events can be catalysts and drivers for meaningful long-term change,” he says.