Two of Europe’s top asset management CEOs commit to investor long-termism

The CEOs of two of Europe’s biggest asset managers have stepped up to make clear commitments to long-term institutional investing in a sign that fund managers are backing changes to investor behaviour in light of the financial crisis and mooted regulation.
In one initiative, Allan Polack, CEO of Nordea Investment Management is chairing a “task force” on long-term investing that is being put together by two independent Brussels-based think-tanks, the Centre for European Policy Studies (CEPS), and the European Capital Markets Institute (ECMI).
Separately, but on the same theme, Keith Skeoch, CEO of Edinburgh-based Standard Life Investments, has spoken out to argue that “the intellectual debate” on long-term shareholder behaviour based on the stewardship concepts of voting and engagement has been won, but that definitions of best practice needed to be hammered out.
In a speech last week, Skeoch said the shareholder spring and the Kay report showed a growing consensus about the practical measures needed to implement good governance. But he argued that government policies, notably in the UK, such as risk based solvency, mark-to-market accounting and inflation targeting, were working against the long-term risk appetites of pension funds. He added: “There is still much hard work to be done to ensure that effective engagement and comply or explain, which lie at the heart of good governance, are embedded as best practice but it’s as much about the how as the why.”
Skeoch was a former Chairman of the Institutional Investor Committee (IIC), the collective engagement/stewardship arm of the Associationof British Insurers, the Association of Investment Companies, the Investment Management Association and the National Association of Pension Funds: Link
The IIC was criticised for inaction by observers including Lord Myners, the former UK Treasury Secretary. However, the idea of a rejuvenated, independent version of the IIC was proposed in the recent Kay report on UK equity investment.
The Polack-led task force, which has sponsorship from Carmignac Gestion, the Paris-based fund manager, is inviting financial stakeholders to join international experts, academics and regulators in its lobby efforts on EU policy recommendations, which it says aim to “strengthen both the single market for long-term savings, including private retirement savings, and long-term investing in Europe, given its role in promoting growth and ensuring the provision of adequate retirement income.”
The group says the establishment of the task force anticipates the upcoming EU Green Paper on long-term investing and follows the release of a White Paper on pensions released earlier this year. It will look at the impact of Solvency II and other prudential rules on the ability of institutional investors to invest long-term.
The group’s inaugural meeting will take place on 29 October 2012 with four subsequent meetings planned before February 2012 and a final report to be launched in the second half of 2013. The group says in its invite to participants: “The ability of retail and institutional investors to access long-term investment opportunities is crucial to foster much-needed growth and competitiveness in Europe, as well as to provide for adequate, safe and sustainable pensions for its citizens.”
Link to initiative website