Victoria Redgrave tells Zsuzsanna Szabo how corporate access has changed since the implementation of Mifid II and the Covid-19 outbreak
Victoria Redgrave, FMR
FMR Investment Management UK is the London-based arm of Fidelity Investments, founded in Boston in 1946. With assets under management of $3.2 tn, Fidelity Investments operates a brokerage firm, manages a large family of mutual funds and provides fund distribution, investment advice, retirement services, index funds, wealth management, crypto-currencies, life insurance and securities execution and clearance.
The London office opened in 2006, and Victoria Redgrave has been director of corporate access and broker relations there since February 2018. Since 2012 she has been on Fidelity’s corporate access team. She joined Fidelity as an equity investment co-ordinator in 2007.
I think there were about two buy-side corporate access teams operating in London in 2012. What has changed in the space since you have been on Fidelity’s corporate access team?
Yes, as far as I am aware, two long-only buy-side companies had up-and-running corporate access functions, and that was FMR – we built our [London corporate access] team in 2012 – and Norges Bank Investment Management soon after in 2013. Some hedge funds had also started internalizing this function.
Over the last few years, we have seen an expansion of buy-side corporate access with Wellington Management, T Rowe Price, Fidelity International, BlackRock and Capital Group establishing in-house corporate access capabilities. At FMR, we view corporate access as being a vital part of the investment process and a valuable resource to build on our ability to strengthen corporate partnerships.
Since the implementation of Mifid II in January 2018, there has been a drive among investors to create corporate access teams as they receive more requests for direct contact. What is your strategy for this?
We’ve always taken a direct approach. At FMR our analysts own the relationship with the companies they cover. Having direct communication on results days, on news flow, when an analyst reaches out with any questions and having that regular back and forth is extremely helpful.
The FMR global corporate access team complements those existing relationships and serves as a great entry point for corporate management and IR teams to help develop and build new relationships where we do not have a direct dialogue. We’re aware that we are a large machine with many asset classes within FMR – the global corporate access team can help educate and explain our investment organization and research structure.
Each team has a centralized internal inbox that we provide to the IR community so it has a local contact to help point it in the right direction in each region. We encourage the IR community to contact us directly.
How large is your corporate access team now?
FMR has made a significant commitment to build out a global corporate access capability. The team was first established in 2001 in Boston. Over the last eight years, we’ve added coverage in London, Hong Kong and Tokyo. We have eight corporate access professionals globally today.
You mentioned on a panel discussion at the IR Magazine Think Tank – Europe 2019 that Fidelity has become more selective about conferences since Mifid II. Why is that, and what factors do you consider before a Fidelity person attends a conference?
I think it’s fair to say that our conference attendance began to decline before Mifid II was implemented but the regulation’s impact has certainly changed the economics of corporate access and added to the dynamics. There has been a noticeable decline over the past few years in our global conference attendance and a downward drift in meeting allocation: fewer one-on-ones and more group meetings at sell-side conferences. Group meetings can be instrumental in the ramp-up period for an analyst, but we prefer one-on-ones, especially if we are shareholders.
I would also argue that there were too many sell-side conferences at one point. When I first started in my role, there were more than 600 EMEA events being advertised. That number has decreased significantly over time. Our investment professionals have identified the must-have conferences to attend, the ones that ultimately add value to their investment process.
Sell-side conferences still play a valuable part in the world of corporate access. They provide a good opportunity for our investment professionals to get access to a number of corporates over two or three days, interact with their peers and sell-side analysts, attend fireside chats/panels, hear recent developments and updates from corporate management teams and get an overall sense of how the sector is really doing.
There’s a lot of talk about direct engagement but, for many corporate access professionals on the buy side, the sell side continues to play a valuable role. How has your relationship changed with the sell side since Mifid II came into effect?
First, I agree with other buy-side professionals out there: I think the sell side continues to be a key facilitator in the corporate access space. I don’t think it is going away. I think we can still work with it – and we do.
The sell side appears to be focusing on how it can differentiate its event offerings, establishing its value in ways that satisfy the needs of its clients by looking at different regions, thematic conferences and incorporating ESG. The sell side provides great access to government officials, regulators, experts, regions further afield and other contexts where we may not be able to get access.
At FMR, we execute our own bespoke sector-themed or geographically focused field trips and headquarter visits with public and private firms. The vast majority of these research trips are arranged by the global corporate access team, working directly with the corporates. I think it can still be a win-win situation for both sides.
Beyond Mifid II, the UK Stewardship Code will likely require greater engagement around ESG this year. Is your team responsible for engagement on ESG topics?
No, we are not. We have a dedicated ESG research and stewardship team based in Boston working across asset classes to develop ESG insights and foster inclusion in the investment process. The team has a sector assignment model.
What challenges has Covid-19 posed to you and your team so far?
Undoubtedly, Q1 has been one of the most extraordinary periods in our personal and working history. Covid-19 has thrown some challenges in our direction and slowly but surely we are adapting to the new and very different reality of today’s environment. My team and I are in constant contact and are set up with the resources we would need in the office to do our jobs effectively. We are in touch [virtually] with our regional team members, our investment professionals, the IR community and the sell side.
Has there been an increase in inbound meeting requests from IR teams and issuers in general and/or growth in outbound meeting requests from your portfolio managers and analysts?
Our consumption of corporate access has increased in interactions, particularly with calls (both inbound and outbound requests). I think the IR community has been very proactive in keeping the communication channels open and engaging with its shareholders. We certainly welcome that. IROs play a key role during these times of uncertainty and volatile markets. We saw more direct engagement off the back of Mifid II with the IR community, and Covid-19 has definitely accelerated that.
Our analysts are also very proactive in managing their relationships with the companies they cover. I do not feel there is any gap or lack of communication at this point.
Are your analysts and portfolio managers currently more interested in meeting with portfolio companies, or is there also an interest in prospective companies?
Our analysts and portfolio managers are definitely keeping up communication, with perhaps more frequency with their portfolio companies, given there is so much uncertainty and potential for dislocation in share prices in these markets. We see that as possibly creating more investment opportunities, so talking to more companies is very much of benefit.
What is your advice for how companies should communicate with Fidelity during the pandemic?
Communication! Keep an open line of engagement and be as transparent as you can. I think this is a great opportunity for the IR community to step in and elevate questions that investors are asking to management. We appreciate and understand the high demand on them and their management team’s time. We fully understand if management is not always available to take a call given the issues it is dealing with – meaning from our perspective a meeting with the IR team can be just as valuable as meeting with management.
Also, a comprehensive IR website is another primary point of contact for investors. Use it and take the time to ensure it is up to date with historical company filings, presentations with replay webcasts, earnings call transcripts, a clear listing of all upcoming results presentations and dial-in/webcasts information. Our analysts find this extremely helpful and it can help save you a lot of time, especially during a crisis.
What should IROs do differently during the crisis?
It is very rare for an industry/company to always have clear skies, and no business is immune to risk. Investors ascribe a premium to companies that have a track record of conservative guidance, upfront and honest communication when things go wrong and heightened responsiveness during such periods.
Covid-19 has caused a swift pivot to video meetings and conferences. What do you think its legacy will be for corporate access? Do you think there will be greater acceptance of video meetings in the future?
There is clearly a differentiator between a one-on-one in person versus video/audio. While virtual interaction will certainly play its part in the current environment, I’m sure our investors will continue to visit companies at their headquarters once travel restrictions are lifted and it is safe to do so.
At FMR, our investors like having access not only to senior management but also to segmental/geographical management, particularly if a certain area is key to the strategy. They like personalized one-on-one events/teach-ins to deepen their knowledge, such as production site tours or visits, one-on-ones with other members of mid-tier management or division heads, demonstrations of new/key products, arranging meetings with customers, and so on.
I think video/audio meetings serve as a good first introduction meeting for a new analyst and will no doubt play a part in the future but I also think face-to-face meetings will remain in high demand with the buy-side community. At FMR we use Zoom and, having used it constantly for the last four weeks, I have been pleasantly surprised by how well it has worked.
In March, a group of major investors organized their own event with corporate CEOs in Boston. Do you think this will become a trend?
This was the first buy-side collaboration and it was a huge success, despite going virtual because of the current environment. All the buy-side corporate access teams that were directly involved in the arrangements did a fantastic job and executed a strong line-up of one-on-one chief executive meetings. I think we will see more buy side-only events in the future. I view this as another opportunity for the investment community to meet with corporates.
