NFJ Investment Group, LLC Proxy Policy
Under SEC Rule 206(4)-6, investment advisers have fiduciary obligations to their clients if the advisers have authority to vote their clients’ proxies. Under our standard contractual agreements, NFJ Investment Group, LLC (“NFJ” or “the Firm”) is authorized to vote proxies on behalf of discretionary accounts.
The rule requires an investment adviser that exercises voting authority over client proxies to adopt policies and procedures reasonably designed to ensure that the adviser: 1) votes proxies in the best interests of clients, 2) discloses information about those policies and procedures, 3) discloses how clients may obtain information regarding individual security proxy votes cast on their behalf, and 4) maintains appropriate records relating to actual proxy voting.
The Firm has a Proxy Committee (“Committee”) that is responsible for establishing policies and procedures reasonably designed to enable the Firm to ethically and effectively discharge its fiduciary obligation to vote all applicable proxies on behalf of all discretionary client accounts and funds, and to ensure compliance with all of the requirements. Annually (or more often as needed), the Committee will review, reaffirm and/or amend guidelines, strategies, and proxy policies for all domestic and international client accounts, funds, and product lines.
The Firm utilizes a third-party proxy service provider for support services related to the Firm’s proxy voting processes/procedures, which include, but are not limited to:
- The collection of proxy material from our clients’ custodians.
- The review of proxy proposals and appropriate voting recommendations on behalf of the Firm.
- The facilitation of proxy voting, reconciliation, and disclosure, in accordance with the Firm’s proxy policies and the Committee’s direction.
- Recordkeeping and voting record retention.
As reflected in the Firm’s proxy guidelines, the Committee will vote proxies in a manner deemed to be in the best economic interest of its clients, as a whole, as shareholders and beneficiaries of those actions.
The Committee recognizes that each proxy vote must be evaluated on its own merits. Factors such as a company’s organizational structure, executive and operational management, Board of Directors structure, corporate culture and governance process, and the impact of economic, environmental, and social implications remain key elements in all voting decisions.
The Committee will consider client-specific preferences and/or develop and apply criteria unique to its client base and product lines, where appropriate. As needed, the Firm will communicate this information to its service provider so those clients’ proxies will be voted accordingly. The Committee will review the service provider’s capabilities as agent for the contracted services noted above.
An Independent, Objective Approach to Proxy Issues
In the absence of express contractual provisions to the contrary, proxies will be voted for all of the Firm’s discretionary investment management clients.
The Firm maintains its own proxy guidelines for U.S. domestic proxy voting issues as well as international proxy voting issues. ERISA accounts will be voted in accordance with the Firm’s U.S. Domestic Proxy Guidelines, as such guidelines include ERISA-specific guidelines and requirements. “Taft-Hartley” proxy voting guidelines as provided by the service provider are applied as required. Global proxy matters will generally be voted pursuant to recommendations of the service provider. In addition, accounts with a sustainable investing mandate will be voted in accordance with the Sustainable Proxy Guidelines. Guidelines are available as described below.
The Firm provides and maintains the following standard proxy voting guidelines:
- ISS Global Policy Guidelines
- U.S. Sustainability Proxy Voting Guidelines
- International Sustainability Proxy Voting Guidelines
Exceptions to Policy
The Firm’s proxy policies, as outlined herein, generally will not be applied where the Firm has further delegated discretionary investment management and the authority to vote shares to a properly appointed subadviser, such as may be the case in some managed separate accounts, wrap programs, and funds.
In those situations, proxy votes cast by the subadviser may be governed by the subadviser’s proxy voting policies and procedures.
The Firm may choose not to vote proxies in certain situations, or for certain accounts, such as, but not limited to, when the cost of voting would exceed any anticipated benefit to the respective client(s); when a proxy is received for a client account that has been terminated; when a proxy is received for a security no longer managed; and/or when the exercise of voting rights could restrict the ability of an account’s portfolio manager to freely trade the security in question (for example, in certain foreign jurisdictions known as “blocking markets”).
Conflicts of Interest
Due to its diversified client base and numerous product lines, the Committee may determine a potential conflict exists in connection with a proxy vote. The Committee will determine how to address the conflict and that may include voting strictly in accordance with policy, and/or allowing the third-party service provider to vote in accordance with its guidelines.
Although the Firm does its best to alleviate or diffuse known conflicts, there is no guarantee that all situations have been or will be mitigated through proxy policy incorporation.
Securities Lending Program
The Firm manages assets for clients (including the Virtus Funds (“Virtus Funds”)) that may engage in “securities lending” programs. In a typical securities lending program, clients or funds lend securities from their accounts/portfolios to approved broker-dealers against cash collateral. On behalf of clients and the Virtus Funds, the Firm seeks to balance the economic benefits of continuing to participate in an open securities lending transaction against the inability to vote proxies. On behalf of clients and the Virtus Funds, the Firm will call loaned securities back to vote proxies, or to otherwise obtain rights to vote or consent with respect to a material event affecting securities on loan when the adviser believes it is necessary to vote.
Records Related to Proxy Voting:
All proxy voting records, including policy and procedures, proxy statements, votes cast, and any correspondence relative thereto will be maintained in accordance with the applicable provisions of the Investment Advisers Act of 1940 (as amended) and pursuant to the Firm’s Data Retention Policy. To obtain information about specific voting issues, please e-mail: [email protected]
Virtus Funds shareholders:
Shareholders of the Virtus Funds may request fund-related proxy voting information by calling 800-243-1574.