Follow Us

Follow us on Twitter  Follow us on LinkedIn

26 November 2012

IPE: Pension funds must not be faceless investors

Default: Change to:

Pension funds must strive to become more than simple "faceless investors", a corporate governance specialist at Dutch asset management giant APG has insisted.

According to Mirte Bronsdijk, it is important for institutional investors to create a situation where there is a mutual understanding that investment is "not about delivering the next quarter and preventing profit warnings". Speaking in London last week at the National Association of Pension Funds' (NAPF) corporate governance conference, she noted: "It's about creating mutual trust also that, as a long-term investor, you've got to stick with them for the longer term and not try to push them in certain directions for the next couple of months. When discussing governance with one of the companies we are investing in, a board member  said: 'I feel pressure from faceless investors. I don't know who my investors are because I don't see them, I don't have the discussions with them that I would like to have'."

Catherine Howarth, chief executive of charity FairPensions, noted that there was sometimes a conflict between engaging and keeping management costs low. She said she had recently heard of a situation where an asset management company offering engagement lost a mandate to a rival with no stewardship function – as the rival's fees were a single basis point lower, sending a "fairly clear message" to the industry.

However, Bronsdijk once again stressed the importance of engagement, citing the approach Swedish companies often take by staffing nomination committees with their five largest shareholders, allowing them to be involved in issues such as succession planning.

Full article (IPE subscription required)

© IPE International Publishers Ltd.

< Next Previous >
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information

Add new comment