UTI MF prefers to be ‘engaged’ investor than ‘activist’

UTI MF will play the role of an ‘engaged’ investor rather than an ‘activist’ investor, said Leo Puri, Managing Director, UTI Asset Management Company.

Identifying opportunities Drawing a distinction between the two, Puri said UTI did not see its role as identifying opportunities to battle boards and managements as a value creation strategy. Such disruptive tactics may be useful for hedge funds but that is not what the UTI wants to do. Puri said this when asked for UTI’s response to the regulatory expectation that mutual funds be more active as shareholders.

UTI would be a watchdog or goalkeeper in terms of ensuring that the basic laws of the land and the tenets of corporate governance are maintained and offer constructive feedback to companies, Puri said.

Admitting that the asset management industry has been passive shareholders in the past, he said it needed to be more accountable. In this connection, UTI has put in place policies to track and monitor developments that necessitate voting, Puri said. He also said UTI is seeking inputs from shareholder associations across the country as well as shareholder advisory service firms (proxy advisories).

In a new development, UTI is also now actively consulting with other investors, Puri said. This was seen during the Maruti Suzuki case recently and Puri said that the outcome reflected the concerns of investors in good measure, if not entirely.

Abstentions in voting Asked about the high proportion of abstentions in voting by UTI on various company resolutions, Puri attributed this more to a ‘cultural’ reflex and agreed that this needs correction. He said abstentions were a form of protest, albeit a milder one.

Conceding that it did not have the same ‘bite’ as a vote against a management proposal, Puri said UTI was looking substantively at decisions where they have been uncomfortable with company management and reviewing the necessary processes. Puri said boards and management react in extreme fashion to criticism from investors and media and hoped that both sides would show maturity in handling dialogue.

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