“Today, if you are in emerging Asia and have good-quality governance, the valuation multiples you get are so much better. Any entrepreneur who truly wants to create value will adopt good governance standards,” he says.

“This is not a government initiative. It is happening because the markets are evolving. If you want to make money, your governance has to be of higher quality. We don’t see that as much in Europe, where there’s a lot more of a governmental push towards this.”

While this is good news for UK-based fund managers, there are additional hurdles to contend with, however, particularly further down the cap spectrum. Hicham Lahbabi, deputy head of Asian equities at Amundi, notes that although ESG is a key focus for many younger emerging market small caps, it can be difficult for western investors to determine whether they really are sustainable investments or not.

See also: Chinese equities: Will there be a sea-change in sentiment?

He says small-cap companies often do not have the same structure in place for areas such as corporate governance, or to formally implement plans for sustainability efforts such as a net-zero transition.

“Also, some of those names haven’t started their net-zero journey. For now, they have to be fully focused on their one product or their niche market, and can’t afford to allocate resources to something other than the business itself.

See also: ESG Out Loud: Interview with Eleanor Harry

“So, for investors, if ESG is something that is very important, smaller caps are at a disadvantage versus large caps because they still don’t have the resources internally to work on that and give investors as much comfort as large-cap companies can.”

Gaurav Narain, manager of the India Capital Growth fund, which as of November held 47.8% of its portfolio in small caps and 38.9% in mid caps, says regardless of governance policy, companies of varying sizes are recognising the importance of ESG in order to be seen as a market competitor.

To read more, visit the February edition of Portfolio Adviser Magazine

Instead, UK adults hold an average of 50% of their wealth in property and 15% in cash.

In comparison, US retail investors hold almost four times the amount (33%) in equities and mutual funds (outside of pensions), and just 26% in property.

With UK adults holding some £14trn in total assets, abrdn has urged the government to take action to address the UK’s risk culture and boost capital markets.

The firm’s analysis suggests that if UK adults raised their participation in investments to US levels, it could unlock up to £3.5tn for capital markets.

See also: London Stock Exchange sees fewer than 20 IPOs in 2024

James McCann, deputy chief economist at abrdn, said: “Investing culture is a very real part of American life. As an economist who has lived and worked in both the UK and the US, I have seen first-hand the stark differences in attitudes between the two countries around participating in financial markets.

“Equity ownership is more common in the US, where households hold a much greater share of their wealth in stocks and shares compared to their UK peers.

“Culturally, there is a greater focus on using financial markets to build financial independence in the US. I have been particularly struck by the prominence of the FIRE movement – Financial Independence Retire Early.”

Xavier Meyer, CEO Investments at abrdn, added that the UK is “streets behind many other developed countries” in terms of retail participation.

“Establishing a national culture of long-term share ownership will be crucial if we want to ensure healthy capital markets and shore up individuals’ long-term savings. We need a virtuous circle of good regulation, good products and both institutional and retail participation.

“Getting the UK investing is a critical challenge for society and, as an asset manager and investment platform owner, we aim to be part of the solution.”

See also: CIOs name trade wars and concentration risk as 2025’s top concerns

Meanwhile, interactive investor CEO and abrdn COO Richard Wilson believes that scrapping stamp duty on UK shares could provide a “big bang moment” to encourage more of the population to engage with the stockmarket.

“If stamp duty wasn’t a barrier to investing, why is it that we are losing systematically to the markets that don’t apply it? 

“Sweden, famed for its personal investing culture, applied a Financial Transaction (FTT) Tax of 0.5% between 1984 – 1991. Having removed FTT, the market has grown and the burgeoning activity in Swedish capital markets is enough to make the rest of Europe blush, if figures compiled by New Financial earlier this year are anything to go by.”

I started in the wealth management industry in the late 1990s and one of the most significant changes has been the diversification of the workforce. Back then, the industry was male-dominated, but today, Adam & Company is moving close to a 50:50 gender split, particularly on the investment management side.

Another major change is industry consolidation. In the past, there were far more boutique firms, but now the same larger brands dominate the market. While consolidation offers brand recognition and comfort to clients, there’s a delicate balance. Firms need to be ‘big enough to matter but small enough to care’.

We’ve worked hard to maintain our brand identity, especially in a regional context. Scotland is a unique market, and what resonates here doesn’t always align with what works south of the border. Understanding and respecting these regional differences is crucial.

Q: What is the investment topic most brought up by clients/investors?

The dominance of the US market. A few key companies often referred to as the ‘magnificent seven’ have had an outsized impact on the market, which has presented both challenges and opportunities. This trend also ties into the relevance of the UK market. Historically, benchmarks were heavily UK-focused, but that has shifted significantly over time, as the UK’s market has diminished in size.

See also: Wealth manager Q&A with Nji Lorimer: The human touch

Another area of concern for clients is economic data, especially around inflation and interest rates. Since Covid, there’s been an increased obsession with these figures, which has fostered a short-term mindset in a lot of investors. It is important to guide clients away from short-term noise and encourage them to focus on longer-term themes and diversification.

Q: What piece of regulation has had the biggest impact on your day-to-day role?

Regulatory focus on consumer value has had the biggest impact on wealth management firms. Twelve years ago, it was the Retail Distribution Review and now it’s Consumer Duty. It’s a huge piece of work behind the scenes, but it provides a very useful framework against which to judge yourself. It’s a positive move to ensure clients are being supported, given the right information, getting the right product and getting good value for money. Continuing to ensure we are delivering the right client outcomes is vital.

Another regulatory area that has a big impact day to day is anti-money laundering and Know Your Customer requirements. Educating clients on the importance of these checks and finding ways to make the process more palatable is key.

Read the rest of this article in the October issue of Portfolio Adviser magazine

I have been working in or researching the investment industry since 2008. Clearly, there has been material change to regulatory regimes and product innovation in this time, but I would say one of the most significant – and underappreciated – changes I’ve seen is that there is greater tolerance, if not outright demand, for cognitive diversity within investment teams.

Risk-taking individuals have begun to realise the benefits that attracting a diverse team with both breadth and depth of experience can have on the robustness of debate and avoidance of group-think. This in turn leads to more robust products, decisions and, ultimately, client outcomes.

Q: What is the investment topic brought up most by clients/investors?

The topics of interest tend to ebb and flow with the market and what is topical in the news. Presently, we’re engaging heavily on the UK Budget and US election. This year in particular, with over 50% of the global population going to the polls, we’re seeing heightened market volatility that’s driving a lot of queries.

We’re using this as an opportunity to engage on our investment principles, which emphasise diversification and discipline, as well as our investment process, which looks past near-term election noise to potential policy impact on markets and valuations over the next three-to-five years.

Read the rest of this article in the November issue of Portfolio Adviser magazine

In Reboot’s 2024 Race to Equality report, 22% of employees reported reduced funding for diversity programmes, while over a quarter have seen elimination of diversity-focused roles in the past two years. As efforts to increase diversity in the workplace stutter, 42% of respondents believe the main reason for this is budget cuts.

In addition to a decrease in fiscal efforts towards diversity, some did not find an open environment for discussing racial and ethnic diversity. Almost half of employees said they felt pressure not to advocate for ethnic and racial equality in the workplace, while another 42% felt they needed to be cautious while advocating. Ethnic minorities felt this more intensely than their white peers, with 45% feeling pressure to stay silent compared to 35%.

See also: Investment firms broaden demographics data collection to foster an inclusive culture

Noreen Biddle Shah, founder of Reboot, said: “This year’s report highlights a stagnation in race sentiment since Reboot was launched four years ago. Even more concerning is the growing trend of employees feeling pressured to remain silent on issues of racial and ethnic diversity. Many fear repercussions if they speak up. A real example is that not one of our senior ethnic minority ambassadors was able to share a quote in response to this year’s research. Four years ago, this was not an issue at all.”

Within recruitment, near three quarters believe their company is attempting to be more ethnically and racially diverse when hiring. However, 59% have said that their identity or background has had an adverse effect on receiving opportunities, increasing from just 29% two years ago.

Rick Lacaille, former chief investment officer at State Street Global Advisors, said: “Our diverse talent pool offers an enduring, positive differentiator for the UK financial services industry, yet the Reboot report suggests this potential is being squandered by firms’ inability to address the need to build an inclusive culture. Investors in the UK may yet benefit from diversity, but regrettably, more regulation relating to disclosure may be needed.”

See also: bfinance: Just 4% of asset managers majority-owned by ethnic minorities

Some of this difficulty may be stemming from leadership, which 70% described as “actively resistant” to ethnic and racial diversity initiatives. The survey also found a drop-off of those believing that senior leadership is doing enough to promote diversity, with just 35% responding positively this year compared to 60% last year.

Baroness Helena Morrissey, chair of the Diversity Project, said: “With so little progress made to date and given heightened racial tensions across the UK, it seems extraordinary that financial firms’ efforts to improve racial equality are diminishing or under threat. But I’m afraid this report corroborates the messages from the Diversity Project’s recent webinar, ‘No Space for Racism’ – there is a clear gap between what needs to happen and what is actually being done at many firms.

“While business leaders can do much more to level opportunity for all talent, encourage openness and deepen community within their own companies, the regulator can also help by providing clear expectations. The Diversity Project, Reboot and #TalkAboutBlack have written to the FCA to urge a renewed focus on tackling racism and improving culture.”

While DEI principles have had growing acceptance in the investment industry, the uptake of principles has experienced lag. Although 36% of institutional investors claim they are unlikely to hire someone without gender or ethnic diversity, just 22% of firms treat diversity as a “significant factor” in selecting a manager. There is little impetus for change in this area from the investment client perspective, with 78% of investment client respondents calling diversity “irrelevant” as a factor for selection.

See also: Rainbow ceiling represents a ‘hidden gem’ of an investment opportunity

While firms may have the desire to create a more diverse manager environment, bfinance recognised that this can be challenging in a niche strategy area, where the pool of candidates can be limited.

Martha Brindle, senior director of equity and Fiyin Kosoko, senior associate of ESG and responsible investment, said: “Broad tenders that maximise the universe of asset managers under consideration for any given mandate can be helpful for investors that wish to see diversity principles embedded in their partner appointments, by widening their choices so that these starting principles can flow through to end implementation.”

Ownership of firms also continued to show a major imbalance of those with gender and ethnic diversity. This was slightly better in the US market, where 6.1% of asset managers were majority-owned by ethnic minorities and another 6.1% were majority-owned by women, according to a 2021 report by the Knight Foundation. In general, Europe focused their diversity efforts on company leadership and senior investment staff rather than ownership.

See also: Diversity Project Europe: Just 20% of asset managers track social mobility

“It’s important to remember that investors’ definitions, preferences and beliefs surrounding diversity differ greatly,” Brindle and Kosoko said.

“We noted regional differences, such US investors’ greater focus on diversity of ownership. Asset owners bring specific views and may show a preference for managers that align with their particular philosophy on diversity. And, even where the investor has quite clearly defined views on this subject, they may decide not to emphasise them across every part of their portfolio. In short, there is no ‘one size fits all’ approach.”

75% of asset managers have some sort of DEI policy in place, though bfinance noted that “having a policy does in place does not necessarily mean that the policy has substance or involves meaningful commitments”.

The not-for-profit financial services advocacy group concluded from its findings that corporate culture should remain “a top priority” across the sector. A further 99% of the 100 respondents said it is ‘extremely important’ or ‘very important’ that they work in a positive environment, while 47% of those surveyed chose the statement: “I like a workplace that values its people” from a list of six, as a top priority.

See also: CCLA mental health benchmark reveals limited progress over past year

What’s more, the survey found that respondents see sustainability as a “defining characteristic of corporate culture”. Approximately 96% of respondents believe that financial services companies have a critical role in limiting climate change and biodiversity loss, yet 61% are concerned the sector is not doing enough to tackle climate-related risks.

Diversity of thought

Elsewhere, inclusion and diversity are highly valued by employees. When asked the challenges that more diverse thinking would help their respective places of work, ‘poor leadership’ came out as the top answer, having been cited by 40% of those aged between 35-54 and 37% of those over the age of 55.

Similarly, approximately one-third of respondents cited a lack of diverse perspectives in decision-making as the biggest barrier to success.

The report stated: “While the financial services industry has placed a considerable focus on diversity and inclusion, the survey suggests that fostering diversity of thought – critical for effective workplace cultures – has fallen behind.”

See also: Generation next with Sarasin & Partners’ Tom Kynge: People skills are key

Pat Sharman (pictured), co-founder of Everyone Matters, said “companies need to walk the talk and stay true to their core values”.

“If they do, it will be reflected in a positive corporate culture, which will benefit everyone in the financial services workplace,” she explained. “Diversity of thought helps creative and critical thinking, which are essential future workplace skills as defined by the World Economic Forum.”

The remuneration guidelines were formed under three principles, which included promoting long-term value creation, supporting individual and corporate performance, and delivering remuneration “clearly linked” to company performance.

Andrew Ninian, director of stewardship, risk and tax at the Investment Association, said: “We have simplified our Principles of Remuneration to demonstrate that investors want to incentivise delivery of long-term performance. Our Principles set out the main areas that investors are interested in, stress that each company should adopt a structure that makes sense for its business and the market it operates in, and that we expect early engagement on any potentially novel changes.

“Investors want to see companies succeed and deliver long-term returns to their shareholders, with the structure of executive pay playing an important role in driving and rewarding these results.”

See also: Investment Association: Bonds command August inflows

The IA encouraged companies to undergo a shareholder consultation period before making material changes to remuneration policies to gain a greater understanding of shareholder expectations, as well as sending a ‘wrap up letter’ following any decisions to ensure investors stay informed.

“Shareholder consultations are an opportunity to engage in open and transparent dialogue, ensuring that all perspectives are considered and valued,” the guidelines stated.

“We recognise that this inclusive approach needs to be reciprocated by shareholders to create a constructive exchange of ideas. To facilitate a constructive dialogue, committees should seek early engagement to provide shareholders with sufficient time to consider the proposals and offer meaningful feedback.”

Companies were also prompted to detail how pay structures work across the firm, including the ratio of pay between the CEO and average employee, and how any changes to policy affected employee retention. The IA warned against only using benchmarking as an indicator for remuneration, as it can create a “ratchet effect in the market”.

The guidelines detailed expectations for basic salaries, which the IA notes should be in line with the “relevant wider workforce in their locality”, pensions and benefits. It also recommended that bonuses payouts be explained to shareholders, and that if bonuses are not based on quantifiable metrics, that there is rationale on how success is measured.

See also: Investment companies will no longer be required to produce KIDs

“Shareholders want bonus payments to be consistent with the financial and non-financial performance of the company. Shareholders expect that good performance against non-financial/strategic metrics would normally translate into financial performance of the company,” the report stated.

“Therefore, in circumstances where bonus is payable for non-financial performance only, shareholders would like to understand the committee’s rationale in support of such payments, including details on how the achievement of the non-financial metrics were evidenced and how pay outcomes are justified.”

In order to align the goals of shareholders and executives, the report stated that shareholders look for executives to have a minimum share holding requirement for each executive, with consequences if this is not upheld. They also advocated for the UK Corporate Governance Code requirement which ensures executives continue to have responsibility for their decisions at the company by holding shares for two years after their departure.

More than a hundred years since women first participated in the modern Olympics, Paris 2024 has met a significant milestone for diversity, equity and inclusion (DE&I) as the first Games to reach full gender parity. While it’s been a long and slow process, shifting gender imbalance in the Olympics marks a new era of diversity in sports.

The asset management industry, however, is yet to follow in its footsteps. A recent McKinsey report found that women hold just 23% of all investing roles at private equity firms globally, with men continuing to dominate financial management roles.

Traditionally all-male senior investment teams have created a legacy of male-dominated networks and mentorship opportunities in these areas. The fund services and investment support sector, however, is interestingly less skewed towards male employees.

See also: Reboot: Financial services staff disappointed with firms’ race riot response

Exploring the factors that attract a diverse workforce into investment support functions is a useful first step in rebalancing gender representation throughout the entire asset management industry.

This balance cannot be addressed within an organisation’s four walls alone – it requires a sector-wide approach to ensure that fresh perspectives, technological proficiency, and adaptability are welcomed and valued within the workforce.

Visibility creates possibilities

That we’re seeing positive shifts in investment support roles means the beginning of a sea change in gender balance across the whole asset management industry. Empowering women in private equity has long been a goal for. But making real strides in DE&I requires more than the occasional ‘token hire’, or a one-time gender training session.

Addressing the gender imbalance in the industry ensures companies don’t miss out on female talent. Women have enormous purchasing power, controlling the majority of household spending and in most categories of consumer goods.

So why does the power switch when it comes to investment capital? Surely women have an understanding of which products and services truly meet consumer needs and are also well-positioned to excel in investment decisions.

This is why we have spearheaded IQ-EQ Launchpad, a unique initiative designed to support first-time female fund managers to launch and build their funds. This includes a comprehensive support package providing women fund managers with tailor-made training, as well as preferential service terms, access to a global network, and knowledge-sharing to bridge the gender gap.

See also: Diversity Project Europe: Just 20% of asset managers track social mobility

Championing women in leadership positions has also been a priority of ours. Women represent almost 40% of IQ-EQ’s global management team – an increase from 10% in 2021. Some 49% of all line managers are female, while 53% of the 558 people promoted in 2023 were also women.

This is a testament to the internal initiatives we have implemented to bring greater gender inclusion and equity to fund management.

For instance, IQ-EQ’s Elevate scheme is a bespoke women in leadership development programme designed to suit all career stages. It supports female employees through workshops, guest speakers, clubs, and groups, with an additional 138 participants going through the programme in the last year alone. This is reflected in the increasing percentage of women across our senior management teams.

Building a culture of inclusion

Whilst training, mentoring, and support is important to improve gender equity across asset management, it’s other initiatives that have a greater impact on inclusion

 Access to fair and equitable compensation, including pay, promotions, and a flexible working environment are all critical to attracting and retaining female (and of course male) employees. Asset management firms should regularly review pay equity, to identify any discrepancies in pay based on gender.

See also: #InspireInclusion: How can asset managers maintain momentum?

While tradition is always moving, it’s still the case that women are more likely to play the primary role in caring for children or other family members and tend to make better use of flexible working arrangements

 As many bigger financial institutions turn their backs on remote working and push their employees back to the office five days a week, they risk losing out on a wider talent pool (men and women) and other underrepresented groups.

Collective strategies to shatter the glass ceiling

The growing acceptance that diverse investment teams yield better results is a promising sign that the tide is turning in asset management. Bringing fresh perspectives and more well-balanced teams is not only the ‘right thing to do’, it also adds value to firms’ bottom lines.

As well as individual firms focusing on this, it needs an industry-wide approach to address the structural issues at the heart of this challenge and ensure that women in asset management are on the same ladder and can also climb as high as they want!

Meanwhile, they highlighted firms have taken very little action since the BlackLivesMatter (BLM) movement four years ago to address the topic of racial equality in the workplace. 

See also: Understanding the current climate of racism in the UK: What corporate firms can do

Reboot, supported by Opinium, conducted a survey of 260 UK financial services employees in August and September in the wake of the UK race riots and rising anti-immigration sentiment. 

Almost three quarters (74%) said their firm has taken action, but this was mainly through internal communication. 

For example, more than half (56%) said their company released an internal statement of support, and slightly less than half (47%) said their company provided more flexibility to work remotely or travel at different times. 

Reboot also reported respondents felt their firms’ responses amounted to little more than a “knee-jerk” reaction, with such responses ending within a week. Further, they said most of the comms were “formulaic” and directed staff to employee assistance programmes, often run externally to the company.

Less than one in 10 (8%) said their firm issued an external expression of support, and many felt there were barriers to doing so themselves. For example, respondents were concerned about reputational risk and causing harm to future career growth prospects – ethnic minority respondents cited this problem more so than their white peers. 

Noreen Biddle Shah (pictured), founder of Reboot, explained little has changed in the industry over the past four years: “Unfortunately, 70% of our respondents think that since the initial BLM movement’s launch – which is when we founded Reboot to tackle the topic of race in the workplace – many organisations have done very little in the past four years to make material changes. Action and advocacy from the top is needed to drive greater racial equality in the financial services –  and currently, words are not translating into progress.”

However, she welcomed the government’s commitment to introduce ethnicity pay gap reporting.

“We hope with their almost 100 days in power, there will be more information on how (not if) this will be implemented, and as a priority.”

Meanwhile, baroness Helena Morrissey, chair of the Diversity Project, added the industry has a long way to go to help employees who feel concerned about racism. “Actions speak much louder than words, yet the reality is that many firms are unsure about how to communicate with their employees about these issues, let alone take the right actions. 

“A recent Diversity Project webinar acknowledged the importance of language and the need to check corporate communications with those in affected communities – and not shy away from spelling out the issues; the importance of checking in with colleagues rather than staying silent for fear of ‘saying the wrong thing’. It is fine to admit ignorance or uncertainty along with a desire to learn.”

“At a macro level,” added Sachin Bhatia, head of UK pensions & EMEA consultant relations at Invesco, “geopolitical instability, a rise in populism and financial pressures have driven ESG fatigue as well as anti-immigration sentiment. Marginalised groups in the UK are feeling the brunt, particularly where diversity, equity and inclusion initiatives are either being scaled back or handled with extreme caution.

“Reboot’s annual report is due in Q4 and it will be based on responses of 700 professionals in the UK financial services industry. We are hoping this will help us unravel more of the issues.”

This story originated on sister title, PA Future

The survey, which received 30 responses from medium to large asset managers with a total AUM of over €12.4trn, also found that just 20% of surveyed European asset managers collect data on social mobility. The Diversity Project attributed the disparity of social mobility reporting to the “complexity of the topic and the varying interpretations and issues across countries”.

Bas NieuweWeme, CEO at Aegon Asset Management, said: “Social mobility is a concept we must embrace with vigour. Having returned to the Netherlands after 20 years in the US, I realised we need to broaden our focus beyond gender diversity.

“We have an opportunity to expand DEI initiatives to include the less privileged population here. Despite GDPR constraints, voluntary disclosure models, as seen in the US, can be a guiding light. It’s time for us to define and prioritise social mobility, recognising the untapped potential of our diverse university graduates.”

See also: The Diversity Project’s Whiteman and Aujla: Social mobility can transform and save lives

While gender diversity has received attention from many asset managers, a disconnect remains between the percentage of women in investment and sales positions compared to support roles, such as HR and IT. Just one company reported that over half of its investment and sales team were women, while eight responded that over half of the support team were women. Near half of surveyed companies marked the percentage of women in investment and sales between 21% and 40%.

The ratio of women in asset management also declined with seniority. While over 40% of those in junior level roles were women for the majority of firms, by the C-suite and partner level, near half of companies had 0-20% of women making up these roles.

“Only 38% of organisations in European asset management strategically attract women in underrepresented roles through targeted job platforms and relevant partnerships. Companies could be more creative in attracting female talent, considering, for example, that more women than men in the EU now complete tertiary education, ” the report stated.

“Mentoring and sponsorship can be powerful and practical levers for strengthening the female talent pipeline. Yet only 52% of respondents fully agreed that they offer targeted mentorship programmes for female talent.”

See also: Davies: Why the industry’s efforts to embrace diversity keep falling short

The business benefits of DE&I efforts were recognised by 80% of the asset managers surveyed by the Diversity Project Europe, but need for progress remained in implementation. Just 14% reported that leaders and people managers where held accountable for DE&I objectives, with rewards tied to the achievements in this area. The report stated European asset managers were, as a collective, at “the lower end of established maturity” for addressing DE&I in the business, with an average score of 3.4 out of 5 for maturity.

Craig Blair, country head for Luxembourg at Franklin Templeton, added: “Diversity, equity and inclusion should not be considered as problems to be solved, but rather as opportunities critical to the future attractiveness of the financial services industry. Developing an ecosystem rich in diversity will not only make organisations better places to work, but will also contribute to a more relevant and resilient business.

“On this journey, we must be informed by data and use it to implement sustainable strategies for DE&I. The report suggests that although there are positive intentions across the industry, further progress is needed.”

The changes will see non-exec chair Steve Smith step down at the firm’s next AGM after seven years.

Senior independent director Geeta Nanda will then become interim chair, leading the process to appoint a permanent replacement.

Meanwhile, both Robert Naylor and Christopher Mills will be proposed for election to the board as non-executive directors at the trust’s next AGM in early December.

See also: CG Asset Management criticises PRS REIT board over investment adviser terms

Shareholders representing 17.3% of issued shares wanted to replace both Smith and non-executive director Steffan Francis on the board with Harwood Capital’s Naylor and Mills, who would then work with the remaining board members to undertake a review of the trust to return value to shareholders.

The group included firms such as CCLA, Harwood Capital, and Waverton Investment Management.

However, Francis will remain on the board, with the trust saying he ensures a continuity of property experience.

As a result of the agreement, the investor group has withdrawn the requisition notice.

In a stock exchange announcement today (13 September), the board said: “The board believes the agreement and changes announced today reflect a balance of the views of all shareholders.

“They respect the principles of good governance in orderly succession planning, and help to ensure that a new independent chair and any future board directors have the appropriate blend of skills and expertise.

“The board believes this agreement will allow the company to move forward and focus on value maximisation for all shareholders.”

See also: Neil Goddin returns to Aegon AM as head of equities and multi-asset

Marcus Phayre-Mudge, fund manager at PRS REIT shareholder TR Property, said: “It is heartening to see that PRS REIT’s board has responded swiftly and decisively to the sizeable group of shareholders with concerns about the company’s governance.”

TR Property was not a part of the requisitioning group.

“This matter has ultimately been about the board’s renewed arrangement with its external manager. Shareholders rightly felt that the contract was designed in a way that did not align the manager with their interests,” Phayre-Mudge added.

“Situations like this contribute to the imperfect reputation of external management, but it is important to remember that it is entirely possible to get these contracts right, with good controls including fees based on market cap, a lead manager that eats their own cooking [an element of the fee paid in shares], and one-year notice – maximum – rolling management contracts.

“It has been good to see a group of long-term shareholders stand up on this issue, serving as a reminder for all REIT boards to embrace governance practices that safeguard the interests of shareholders.”