Featured Blog

Giant funds must curb short-termism

Many of the problems of present-day finance have their origins in the horizons set along the investment chain. The key players in this chain are the giant pension, sovereign wealth and endowment funds who appoint external asset managers, who in turn invest in companies. If these funds invest with their eyes set partially or largely on the short term, it sends a clear message down the line and embeds similar standards throughout the capitalist system.

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Latest Blogs

Markets as amplifiers of crises

The finance sector is widely recognised as an originator of periodic crises. What is less widely discussed is the unhelpful role that the finance sector can play in amplifying crises that emerge from entirely non-financial origins.

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Long-term investors using short-term strategies

Large institutional investors who claim to invest with a long horizon and who wish to be seen as champions of a socially responsible form of capitalism, may in fact be contributing to dysfunctional capital markets in which short-termism dominates long-term thinking.

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50 years of efficient market thinking

Fifty years on from its inception, the efficient markets hypothesis still exerts a powerful grip on investors. The widespread reliance on market cap indices as benchmarks for active manager success creates a pervasive tendency towards performance-chasing across the industry. Large asset owners have the power to change this dynamic by changing the way that they engage with and monitor their managers.

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Misdiagnosing the crisis of capitalism

Much of the commentary on the crisis of capitalism ignores the role of institutional investors in creating the conditions in which corporate short-termism can thrive. We argue that a greater focus on long-run value creation in the capital markets – instigated by long-horizon asset owners – could help restore trust in the financial system and deliver meaningful benefits to society.

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