Boards and executives of long-term funds, such as pension plans, sovereign wealth funds, and endowments, have a challenging problem. They need to manage those portfolios to meet their long-term purpose, which may be decades or more into the future. Yet no fund has the luxury of looking only to that long-term time horizon. Each must also meet expectations in the near term in order to continue in its role and with its investment strategy.

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This challenge of meeting both long-term obligations and short-term expectations means that even the longest-term investor must manage across multiple time horizons. This necessity is often at odds with most risk processes, which have been developed to address short-term risks or to target long-term return—but not both.

FCLTGlobal, with input from its members, which include many of the world’s leading asset owners and investors, has raised this challenge as central to their ability to take advantage of their long time horizons. Too often, funds carefully set up long-term investment strategies, with a focus on meeting their ultimate purpose, only to shift to a short-term strategy in response to stressful market conditions.

Strategy | Toolkit

Crisis Conversation Guide

26 August 2020 - FCLTGLOBAL has developed this guide as an extension of the Risk Conversation Guide published in Balancing Act: Managing Risk Across Multiple Time Horizons.

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Risk Conversation Guide

Strategy | Toolkit

Risk Conversation Guide for Boards and Staff

21 December 2018 - ...

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Practical Tools

Strategy | Toolkit

Practical Tools to Address Investment Challenges

21 December 2018 - ...

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Strategy | Video

Long-term Risk Management: Neuberger Berman

26 October 2020 - An interview with Diedre Ypma, Managing Director at Neuberger Berman

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Strategy | Video

Long-term Risk Management: Future Fund

5 November 2019 - An interview with Will Hetherton, Head of Public Affairs & Strategic Relations at Future Fund, Australia’s sovereign wealth fund.

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Strategy | Video

Long-term Risk Management: Washington State Investment Board

9 July 2019 - An interview with with Fred Gjerstad from Washington State Investment Board.

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Strategy | Video

Long-term Risk Management: CPP Investments

9 July 2019 - An interview with with Rocky Ieraci and Steven Richards from the Canada Pension Plan Investment Board.

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Video

Long-term Investment Risk: Climate

11 November 2020 - ...

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Video

Long-term Risk Management: Income Volatility and Distribution

4 March 2021 - Forthcoming research examines societal income distribution in the statistical sense – such as its volatility, skewness, and kurtosis – and relates it to the macro risk distribution faced by investors. This analysis tests the hypothesis that investors’ efforts to reduce volatility reallocates it to individuals in the form of income volatility, and raises the question - Are investors’ risk management practices contributing to inequality?

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Strategy | Video

Long-term Risk Management: Time Horizons (with State Street Associates)

12 October 2020 - For many investors, asset allocation begins with an estimate of volatility, producing the most stable portfolio of assets that still can earn the target return. Learn more from experts at State Street Associates about how the choice of risk timeframe influences a portfolio’s long-term success.

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Strategy | Article

Expert insights on risk management amid COVID-19

6 May 2020 - On 30 April, FCLTGlobal held a webinar for a peer-to-peer discussion on managing risk to support long-term value creation, specifically in light of the ongoing coronavirus pandemic.

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Strategy | In the News

Risk management in a time of crisis

14 April 2020 - ...

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2019 Forum on Risk

Strategy | Article

Key Learnings From the 2019 Forum on Risk

9 July 2019 - On 30 May, FCLTGlobal Members and guests met in Boston for a peer-to-peer discussion on managing risk to support long-term value creation. The Forum on Risk: A Balancing Act provided a venue for participants to exchange examples...

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In the News

Managing Risk Across Multiple Time Horizons

15 February 2019 - A new paper by Focusing Capital on the Long Term (FCLT) acknowledges that investors typically have competing time frames while most of the tools for risk and performance management are for only one investment period. The...

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Strategy | Article

Interview: BlackRock’s Emily Haisley on Risk for Long-Term Investors

18 October 2018 - FCLTGlobal, with its Members, is developing practical tools to address the issue of balancing long- and short-term risks. Part of the process includes interviews with experts in the area of assessing, managing, and planning for...

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Strategy | Article

Interview: State Street Global Exchange Experts Speak on Long-Term Risk

9 October 2018 - FCLTGlobal, with its Members, is developing practical tools to address the issue of balancing long- and short-term risks. Part of the process includes interviews with experts in the area of assessing, managing, and planning for...

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Strategy | Article

Interview: Roland Kupers on Risk for Long-Term Investors

25 September 2018 - Investors often face a challenge of meeting long-term obligations and maintaining the support of their constituents along the way. In particular, they need investment strategies to meet their long-term obligations, but current risk communications, behaviors,...

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Strategy | Article

University of Toronto Publishes Study With FCLTGlobal on Risk Assessment Practices

10 September 2018 - FCLTGlobal’s research is designed to find practical solutions that encourage farsighted decision making within the investment industry. The work we do is primarily intended to explore how every actor on the investment value chain –...

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