FUND MANAGERS HIT BY GENOCIDE ROW OVER INVESTMENTS

INVESTORS in the US have been asked to give fund managers the green light to invest in companies that ‘contribute to genocide’.

Vanguard, which manages £3.6trillion for savers, sells socalled passive funds, which blindly invest in all the shares on specific stock exchanges or in specific markets.

These funds have lower costs because there is no ‘active’ decision by a fund manager on whether to hold certain stocks.

An activist group has now called on Vanguard, the world’s second-largest fund management group, to stop investing in companies that ‘substantially contribute to genocide or crimes against humanity’. But bosses at the investment giant have written to investors in 48 funds asking them to block the proposal.

In the letter, the board of trustees recommends a vote against the proposal. Vanguard is understood to believe it would be wrong to interfere with stock selection, as most funds are sold on the basis that the company does not do this.

Its move has sparked a row with activists. William Rosenfeld, co-founder of Investors Against Genocide, said: ‘If you ask people whether they would want their investments to be in companies that support genocide, I think most would say “No”. It’s a very low moral bar.’

The dispute highlights growing concerns about the way millions of people’s pensions and savings are invested.

The rise of passive funds means millions of savers are unwittingly investing in companies that sell weapons or fail to protect workers from human rights abuses.

While the Vanguard vote, which will take place in America on November 15, is restricted to US investors and some US funds, it could be replicated at other fund managers in Britain.

Vanguard said the company is fully compliant with all applicable US laws and regulations, adding: ‘While the humanitarian issues on which this proposal is ultimately focused are of consequence and deep concern, the issue raised requires diplomatic and political action to resolve.

‘As the proposal calls for divestment, we do not believe this would be in the best interests of investors, as it would violate the fund’s investment objective.’