Boston, MA, 9 Jan 2018 – FCLTGlobal, a not-for-profit organization that encourages a longer-term focus in business and investment decision-making, has released its newest publication, Balancing Act: Managing Risk across Multiple Time Horizons, which proposes new approaches for asset owners to manage investment risk across multiple time frames.
Long-term funds, such as pension plans, sovereign wealth funds, and endowments manage their portfolios decades or more into the future. They are also required to meet expectations in the near term in order to continue with their investment strategy and fulfill immediate needs of their beneficiaries. Too often, however, carefully structured strategies shift in response to stressful market conditions.
“As markets become more turbulent, the challenge of meeting both long-term obligations and short-term expectations is even more pronounced,” said Sarah Williamson, CEO of FCLTGlobal. “Even the longest-term investor must manage across multiple timeframes in ways that are often at odds with most risk processes, which have been built to mitigate near-term risks or to achieve longer-term goals, but rarely both.”
The publication includes FCLTGlobal’s Risk Conversation Guide, designed to facilitate and structure productive discussions about multi-horizon risk for the board and staff of a fund in nontechnical language, helping the fund develop a common understanding of its approach to risk. This includes a set of strategies that asset owners and managers can adopt to effectively manage multi-horizon investment risk, including objective setting, decision management, and performance measurement.
“Given our mission, we see improving multi-horizon risk management as critical to extending investment time frames and an effective method for boards and executives to deliver value to their beneficiaries,” said Williamson.
As part of its research process, FCLTGlobal convened a series of working groups over the past year. These meetings brought together FCLTGlobal’s 50 Member organizations, including some of the world’s leading asset owners, to share best practices and collaborate on innovative approaches to investment risk management.
FCLTGlobal is a 501(c)(3) not-for-profit dedicated to developing practical tools and approaches that encourage long-term behaviors in business and investment decision-making. It takes an active and market-based approach to achieve its goals. By conducting research and convening business leaders, FCLTGlobal develops tools and generates awareness of ways in which a longer-term focus can increase innovation, economic growth and future savings. FCLTGlobal was founded in 2016 by BlackRock, Canada Pension Plan Investment Board, The Dow Chemical Company, McKinsey & Company, and Tata Sons out of the Focusing Capital on the Long Term initiative. Its membership encompasses asset owners, asset managers and corporations from around the world. Please visit www.fcltglobal.org for more information.
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