Responsible Investor

Blood and Gore: talking ‘bout their Generation

Long-term investment performance is the firm’s mantra.

Three years after launch is when most fund managers start selling their performance to investment consultants and prospective clients.

David Blood, London-based chief executive of Generation Investment Management, the high-profile fund management company he set up with former US Vice-President Al Gore, says its own returns have been positive and good ahead of its three-year anniversary of investment early next year. However, he underlines the fund manager’s commitment to longer-term performance targets: “We tell investors that it’s not a one- or two-year track record that we want them to consider because that result can be random due to short-term market forces. Our investment horizon is three to five years.”

Generation invests in undervalued stocks it believes will outperform because of future business prospects in environmentally or socially sustainable sectors: “We recognise that if we do not deliver reasonable, if not outstanding performance, then our mantra is in question.”

With assets under management approaching $1bn (€740m) from 15 institutional clients: five in Australia, five in the US and five in Europe, Blood says Generation

is ahead of a three-year business plan that targeted half that figure. “All the funds who have mandated us believe in our people and process, but they also believe in long-term investing. Our economics are based on a three-year rolling performance fee, and we don’t get paid the performance fee until the third year. As a result, we don’t find investors in a short-term mode with us.”

“We don’t find investors in a short-term mode with us.”

Despite having its European headquarters in London, Generation has yet to win any UK pension fund mandates. Blood says this is a question of geographic focus. UK investment consultants also tend to recommend managers after three years of good performance: “We do have UK individual clients, but we haven’t won any UK mandates, but that’s because we have only competed in two pitches. We have developed strongly in Scandinavia, for example, where we have won mandates. I would be very surprised if we didn’t have UK institutional business in a year or so. There are funds I think will become clients soon.”

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