Welcome to our #103 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
In this week’s newsletter, we focus on how share owners can reclaim their power in a world where most of our money is invested in fund managers such as BlackRock or State Street, who we have delegated our voting rights to.
But why aren’t these fund managers asking us what we think about key issues such as diversity on boards or climate change?
And what can we as share owners do about it?
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You can review the news in brief so you stay on top of global financial, economic and investing trends.
And don’t forget to listen to The Purse Podcast interview with Merryn Somerset Webb, Editor in Chief of Moneyweek, the best selling financial magazine in the UK.
We talk about share power, the fund industry and stakeholder capitalism.
Please enjoy!
I hope you enjoy this week’s newsletter.
Until next week,
Jana
How can share owners reclaim their power?
UK ownership is widespread but share owners need to become active partcipants
UK share ownership is widespread and it continues to grow.
More women have started investing in the stock market as a result of the pandemic. According to Nutmeg, 40% of new investors on their platform during the pandemic were women.
But besides owning equity in companies and growing your net worth, what does being a share owner give you the power to do? And are we using this power?
Almost everyone in the UK is now a share owner…
..and that is in large part due to the pension auto enrollment scheme. Anyone who is employed and earning over £10,000 per annum is automatically enrolled.
Whilst people may understand they have a pension, they may not understand that they are equity holders: they hold small amounts of the big companies in the UK.
Also, approximately three million people have a stocks & shares ISA in the UK which means they're saving money into the ISA wrapper and investing inside that. And millions of people have personal pensions which they will also have equities inside.
So we are now in a situation where the majority of people in the UK will own shares. And this is a huge change. And one that is not fully understood.
What are share owners entitled to?
You are entitled to vote
You are entitled to the annual report
You are entitled to go to their annual general meeting (AGM)
And then raise a resolution or vote on other people's resolutions.
The fund management industry
Today, the majority of people do not own individual shares. They own units in big funds, mostly run by fund managers such as BlackRock, Vanguard or State Street.
To put this in context, BlackRock manages approximately $10 trillion in assets worldwide.
And 40-50% of global assets are held by fund management companies held by institutions, not held by individuals.
By investing in these funds, share owners give away their votes: we are effectively delegating all of our power to them.
And the challenge share owners have is that these fund managers are not coming back to us and every couple years saying: how do you feel about this issue? For example, how do you feel about gender equality now and how do you feel about diversity on boards?
And how do you feel about this oil company? Do you think that in order to make sure the world doesn't run out of energy, we should keep investing in exploration?
Or do you think that in order to mitigate climate change, we should definitely not invest in exploration?
These are the kinds of questions that you think:
Well, that's my money, my shares, my votes. Someone is voting those shares for me. Wouldn't it be great if they asked me?
This is part of the reason we see a disconnect between people and companies and turning against capitalism.
So how do share owners reclaim their power?
By understanding that we own part of the system, share owners can become active participants in the decisions fund managers and companies make.
The technology exists today which allows fund managers to ask share owners what it is that we want.
As a share owner you should ask (via a platform or write a letter):
What are you doing about this?
How are you using my vote?
How are you engaging with the company?
Have you been in for a meeting on this?
What have you told them about it?
Have you given many targets or deadlines on this matter? Let me know.
And add a little addendum (to your letter) saying, I'd like to be able to use my vote myself. What are you doing about that?
As a share owner who owns individual shares via an investment platform such as Interactive Investor (UK), you hold more power.
In the case of Interactive Investor, they will automatically opt you in and let you know about votes coming up (for example).
So lean in and participate. You can attend an AGM, ask questions, propose a resolution and vote on a resolution.
What next?
News in Brief
Financial news
The US Federal Reserve officals see faster US interest hikes than in 2015-2019, according to the minutes. Quantitative tightening (interest rate increases) details remain unclear.
US stocks fall this week as investors brace for war in Ukraine amid new warnings of imminent invasion-another losing week for Wall Street. Nasdaq 100 dropped 1.7% this week.
UK equities beat global stocks in early 2022 as traders hunt for bargains. A broad MSCI index tracking UK companies has added 3.6% in dollar terms since the end of 2021.
UK inflation nears a 30 year high as consumer price index climbs to 5.5% in January (from 5.4% in December). Clothes and footwear pushed inflation higher in January.
UK living standards fell at the fastest pace in almost 8 years in December, a squeeze that is set to intensify in April when energy bills & taxes are due to soar, BBG reports.
Fear Index VDax has hit fresh 13month high due to a toxic mix of inflation and geopolitical risk (Ukraine tensions).
Crypto: bitcoin, ethereum, DeFi & NFTs
Bitcoin and stocks drop after US President, Joe Biden says threat of Russian invasion ‘very high’. Sources claim that Biden's administration is preparing to issue an executive order on cryptocurrencies as early as next week. The wide-ranging order will direct various agencies to study different aspects of digital assets. (See bitcoin’s price here & ethereum’s price here).
Bitcoin’s relationship with global markets is only strengthening despite being regarded as an uncorrelated hedge. Crypto continues to mimic movements in equities, most notably the Nasdaq 100 index.
Fidelity International launches bitcoin ETF in Europe to meet increased demand from institutions. FBTC listed on the Deutsche Boerse Tuesday and on the SIX Swiss exchange in the coming weeks carrying a 0.75% fee.
Reese Witherspoon plans TV shows, films based on Women of the World ethereum NFTs. The news comes one month after World of Women signed for Hollywood representation with music exec Guy Oseary.
Music major Universal to develop NFT fan collection. They are working with Curio, an NFT platform for entertainment brands, to launch NFT projects from UMG's record labels, operating companies and recording artists.
Twitter now lets users add ethereum addresses as a mobile tipping option.
The Purse Podcast
We cover the following in our conversation:
share power
the fund industry
stakeholder capitalism
ESG
women investors
how to become an active share owner
and more
Please enjoy! Listen on iTunes and Spotify+
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This 36-year-old went from living paycheck to paycheck to making over $106,000 selling NFTs.
We’d love to hear from you. Get in touch with Jana via the The Purse website or tweet @jointhepurse and @janicka.
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The Purse provides content for informational purposes only, we do not recommend products or services or provide investment advice. Please do your own research or speak to a financial adviser.
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