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Institutional Investment Mandates: Anchors for Long-term Performance

Ensuring assets are managed in line with these long-term horizons is critical to achieving these goals. This presents a challenge, however, because assets are often managed by asset managers, distinct from the asset owners, and they may have different time horizons, incentives, and goals.

Among the most important elements in ensuring that institutional investor partnerships fulfill long-term objectives are the investment management contracts between asset owners and asset managers, the “mandates.” The terms and conditions embodied in these mandates constitute a mutual mechanism to align the asset managers’ behaviors with the asset owners’ objectives. These contracts define the relationships between asset owners and asset managers and play a crucial role in ensuring the success of these relationships over time.

Shaping these mandates with provisions specifically oriented towards long-term goals can help build stable, lasting investment partnerships and, if designed properly, improve long-term performance. Hear from some of our Members on the importance of a long-term oriented mandate:

Canada Pension Plan Investment Board

Ontario Teachers' Pension Plan

Download Institutional Investment Mandates: Anchors for Long-term Performance

Keywords: Incentive Alignment