Reorienting portfolio strategies and investment management to focus capital on the long term.

Download Report

Since the 2008 financial crisis, there has been plenty of discussion about the perils of short-termism, but concerted action to remedy them is lagging. In “Focusing Capital on the Long Term,” a Harvard Business Review article published in January 2014, Dominic Barton of McKinsey & Company and Mark Wiseman of the Canada Pension Plan Investment Board argue that “the single most realistic and effective way to move forward is to change the investment strategies and approaches of the players who form the cornerstone of our capitalist system: the big asset owners…Action must start with [them]. If they adopt investment strategies aimed at maximizing long-term results, then other key players—asset managers, corporate boards, and company executives—will likely follow suit”.

In a recent survey of public and private pension plans and sovereign-wealth fund managers, respondents overwhelmingly agreed that while the ability to invest long term is an advantage, they do not necessarily have an effective set of implementation strategies/tools to help them realize their aspirations to be long term.

To address this lack of long-term tools for institutional investors (that is, asset owners, including pension funds, sovereign wealth-funds, mutual and other investment funds, and life insurance companies; and asset managers, including investment-management firms and internal portfolio managers at asset owners), FCLT brought together more than 20 experienced investment professionals from nine institutional-investment organizations controlling an aggregate of over $6 trillion in assets under management. Our goal was to develop practical ideas for how institutional investors might reorient their portfolio strategies and management practices to emphasize long-term value creation and, by doing so, be a powerful force promoting a long-term mind-set throughout the investment value chain.

The result of our work provides recommendations across five core action areas that all institutional investors must consider: investment beliefs, risk appetite statement, benchmarking process, evaluations and incentives, and investment mandates. We believe these five areas collectively provide a framework for institutional investors to improve long-term outcomes for their portfolios, their investee companies, and ultimately for all stakeholders.

Strategy | Report

Decarbonizing Long-Term Portfolios

11 April 2022 - An Adaptable, Top-Down Approach to Addressing Climate Change in Investment Portfolios

Learn More
Model Stewardship Code

Governance, Metrics | Toolkit

Portfolio Company Board Diversity Disclosure Template

19 July 2021 - FCLTGlobal’s business and investor communities recognize the need for the private sector to demonstrate long-term value creation along both financial and non-financial criteria, especially when it comes to reporting on metrics related to firm diversity.

Learn More

Strategy | Article

Five tactics for managing portfolio risk

7 April 2020 - Events of the past century tell us that markets almost always recover in the long run. This does not mean that investors should ignore short-term circumstances, nor does it mean they should abandon well-crafted plans...

Learn More