As in all human relationships, communication is the key to successful long-term investment
WHITE PAPER - Being a long term investor
10 years of responsible investment
The UK Environment Agency Pension Fund (EAPF) is an open, active pension fund with liabilities into the next century. Young new members coming into the Fund may not retire until 2065, and will be drawing a pension for many years after that. This means that they genuinely have a long-term perspective on investment – to them successful investments are ones that deliver over decades rather than weeks.
In this paper the EAPF outlines how they have sought to overcome the following challenges and describes their approach to being a long- term investor:
"This long-term perspective clearly is closely linked to our desire to invest responsibly – many environmental, social and governance issues will affect investment returns, but it may take many years for their financial impacts to be visible. The challenge for us is to implement a long-term investment approach in practice, particularly when volatile and unpredictable markets can result in sudden short term underperformance and create pressures to act. In addition, we outsource our investment management to a range of managers and so we need them to act as long-term investors on our behalf."
EAPF gives us an insight in how to become a long-term investor:
"Very much in the spirit of Kay, we start with simply recognise that we are a long-term investor – a simple statement, but one which has powerful consequences. We have found documenting our investment principles in this way very useful. Beliefs and principles can be written in non technical language and help trustees and members to understand what we are trying to achieve."