FCLTGlobal advances our mission by working closely with our Founders and Members on research that makes the case for long-term investment behaviors, monitors how those behaviors change, and develops practical actions that organizations can take.
We have started with three projects. The first looks at standard terms for long-term investment mandates between asset owners and managers. Our Long-Term Portfolio Guide, published in March 2015, expressed that the investment mandate is “a mutual mechanism to align the asset managers’ behaviors with the objectives of the asset owner, not simply as a legal contract.” We believe that changing key terms can form long-term behavior across a range of investment strategies.
A second area of research examines the issuance of public company earnings guidance, particularly short-term or quarterly guidance, which often leads to myopic short-term behavior by both managers and investors. To restructure the conversation, we are developing a handbook of practical tools that can help shift the focus of the investor-corporate dialogue toward longer-term metrics and value creation opportunities. Our research on this topic is being conducted with active input from members of the investor relations, buy- and sell-side investment communities. We are also collaborating with members from academia and the financial services.
Our third project measures progress towards long-term investment behavior using a scorecard. Our goal is to find and synthesize a few precise, empirical, and replicable measures that compare short-term and long-term behavior. Additionally, this measure will help identify owners, managers, and corporations that choose to change their behavior, as FCLTGlobal is especially interested to learn from companies that successfully switch from being short-term to longer-term.
With time, we also anticipate tackling other research areas, including: alternative measures of risk and volatility, decision-making for capital allocation, and innovations such as alternative trading venues and other permanent capital structures.
For questions or comments on our research, please contact us or email [email protected].