Long-term investing requires knowledge, trust and continuity, and is therefore certainly not suited for every pension fund
PAPER: Long-term investing in public equity markets
What does success look like…and how to organize it?
(1) how to minimize the principal-agent problems around long-term investments, and
(2) how to maximize the impact on the companies in which you invest.
In 2015, fifteen Dutch CIOs of asset owners and asset managers wrote an article with the title: ‘Short-term profit or long-term value creation?’ A growing group of pension funds, asset managers, consultants and companies worldwide try to answer this question.
The core aspects of long-term investing are the following: you pay attention to value creation, the potential to create strategic value with the companies you do or do not invest in; so you think fundamentally about investing; your portfolio has focus and therefore invests in far fewer companies than in the entire market; you invest with patience; you are involved, you act as an owner; you pay attention to the societal impact of the company, for example CO2 emissions. The benchmark then has a completely different, more of a free role than what’s currently the case when investing in public equity markets. This paper is a practical next step following the article of the CIOs. We try to be as concrete as possible, and we go from ‘why’ to ‘how’.
The 300 Club is a group of leading investment professionals from across the globe who have joined together to respond to an urgent need to raise uncomfortable and fundamental questions about the very foundations of the investment industry and investing. The mission of the 300 Club is to raise awareness about the potential impact of current market thinking and behaviours, and to call for immediate action.