Preserve Plan investor update July 2020

Nick Pidgeon

by , Senior Investment Manager at State Street Global Advisors

13 Aug 2020 /  

13
Aug 2020

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Hi, I’m Nick Pidgeon from State Street Global Advisors, and we’re here to give you an update about the Preserve Plan, which you are invested in.

How did the plan perform compared to the market, over the last three months? Did we have a good quarter or a bad quarter?

The Preserve Plan invests into short-term debt of high rated creditworthy companies with the principle aim to reduce risk and preserve your savings. The value of these types of holdings increased over the second quarter of 2020, as markets recovered from the COVID-19 induced stresses witnessed in the later stages of the first quarter, which in turn led to a positive fund performance.

What can savers expect for the next quarter?

Savers can expect challenges to continue as threats of second wave outbreaks continue to hamper economies. The UK economy showed small signs of recovery from lows seen in April after easing of some lockdown measures. This trend should continue in July as bars, restaurants and cinemas reopen, including a reduction in the official social distancing measure.

The threat of the Bank of England lowering interest rates from the current 0.10% below zero eased after this was not discussed in the latest monetary policy discussion in June, although Bank of England Governor Andrew Bailey was careful not to rule anything out. Negative rates could be bad for savers as it could mean even lower returns or even negative savings rates in some cases, but good for borrowers with cheaper mortgages and lending costs available.

The Preserve Plan invests into a range of short term investments that seek to achieve the highest return possible within the existing low risk framework which will continue even if the Bank of England moved interest rates into negative territory. We were therefore still pleased to see that the possibility of negative rates was not discussed in June.

How has State Street Global Advisors driven positive social change in the past quarter?

We drive positive social change to the companies that the plan holds through engaging with them and voting on resolutions at company annual general meetings. Our aim is to promote positive changes to the environmental, social and corporate governance practices that the plan invests in.

We recently engaged with Tesco plc, and discussed how strong corporate culture is vital to support the company’s ambitious sustainability efforts. Tesco was the first FTSE 100 company to set a target to become a zero-carbon business by 2050. The company has also committed to source 100% of its electricity from renewable sources by 2030, and so far, has achieved 58% of this goal. In our engagement, we found that Tesco’s board places significant focus on the wider culture of the business. Tesco’s sustainability strategy, the “Little Helps Plan”, is inspired by the company’s core values and aims to mobilise all parts of Tesco’s business to focus on the social and environmental challenges that matter most to its customers, employees, suppliers and stakeholders.

In addition, we engaged with Apple Inc ahead of their annual general meeting. We engaged with the company multiple times to discuss the resolution pertaining to “Freedom of Expression and Access to Information Policies”. We determined that the company’s practices could be further strengthened, as certain aspects lagged those of its peers. During our engagement, we encouraged Apple to establish and publish a formal policy statement on human rights. Apple was agreeable to this request and intends to publish a formal statement on human rights with mention of freedom of expression within a year.

Today, there is a global focus on the value of diversity in the boardroom. Diversity is about having a balance of backgrounds and experiences on boards that manage companies. When we engage with companies, the diversity conversation is no longer about “why” we are engaging on the issue. Instead, the focus is “why not” enhance their board by embracing the value of diversity.

Earlier this quarter, we celebrated the Fearless Girl campaign’s third anniversary and International Women’s Day by creating a “Living Wall”, highlighting the number of companies that have added their first female director to their boards since we began our campaign in 2017. The campaign began with us placing a statue of a girl near New York City’s Wall Street and calling on companies to have at least one woman on their boards, failing which, we would take voting action against directors on the board. After three years of productive engagements and voting, we are pleased to report that since the introduction of Fearless Girl in 2017, 681 companies, or approximately 49 percent of companies identified by State Street Global Advisors, responded to our call by adding a female director.

Your updated fact sheet will soon be available to download in the BeeHive. If you’d like to ask a question in the next update or share your thoughts, you can get in touch with PensionBee via email or Twitter.

As with all investments, past performance is not indicative of future performance and you may get back less than you start with.

Have a question? Call our UK team 020 3457 8444

Have a question?

Call our UK team

020 3457 8444

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