A new paper by Keith Ambachtsheer and John McLaughlin dives into the question: Do pension funds invest for the long term?
Nearly all pension funds would identify themselves long-term investors if asked. But the paper reveals that there is a gap between that sentiment and the funds’ actual investment strategies.
The authors […] reported a significant gap between the long-term investment aspirations of asset owners and the reality of their strategies’ implementation.
On long-term investment, the authors said there was “broad consensus” among respondents to the survey that a longer investment timescale was “a valuable activity for both society, and for their own fund.”
“However, there is a significant gap between aspiration and reality to be bridged,” Ambachtsheer and McLaughlin added.
“Here too a concerted effort—both inside pension organizations and among them—will be required to break down these barriers.”
The authors listed the barriers to long-termism: some areas of regulation, a “short-term, peer-sensitive environment”, a lack of clear investment processes and performance metrics, and difficulties in aligning interests with outsourcing providers.
The paper, which also covers governance issues, can be read here.
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