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Long-term versus short-term approach to investment should not be viewed in isolation says Old Mutual Investment Group

04 October 2013 Diane Radley, Old Mutual Investment Group
: Diane Radley, CEO of Old Mutual Investment Group.

: Diane Radley, CEO of Old Mutual Investment Group.

Trust and confidence are at the heart of persuading investors to invest for the long term. This is according to Diane Radley, CEO of Old Mutual Investment Group, who was speaking at the PRI (Principles for Responsible Investment) conference this week, taking place in Africa for the first time.

Speaking on a panel discussing how to bring about long-termism in financial services, Radley noted that investors are happy to lock away money with trusted private equity fund managers for five to eight years, but will typically have annual reviews of the performance of listed equity managers.

"The long-term versus the short-term approach to investing should not be characterised by the view that it should be one or the other. We should rather be mindful of the impact of short-term Alpha creation on long-term Beta," she said.

Summing up her position in the debate, Radley believes that the key in the discussion on long termism is the need for asset managers to be innovative when it comes to bringing viable assets to the table that address the long-term social and environmental issues facing society, while generating returns for investors. "Old Mutual Investment Group can be proud of the pioneering work it has done in bringing affordable housing, schools, agriculture and renewables investments to the table for investors.”

Also revealed at the event were the results of a CRISA driven research report on CRISA disclosure by institutional investors and their service providers, with assistance from Old Mutual Investment Group, who also featured as a best practice case study in the report.

Says Jon Duncan, Head of Responsible Investment at Old Mutual Investment Group: "CRISA requires that disclosure of the application of its principles by institutional investors be made public in order to be readily accessible to all stakeholders. However, the results revealed by the research reveal a rather selective commitment towards responsible investment by the industry as a whole, and the application of CRISA specifically.

"While almost 50 percent of institutions provide a broad description of this application, only about 30 percent provide the actual details on how this is done, and only 10 percent provide an explanation for failure to apply certain principles,” said Duncan.

The research also showed that there are firm differences regarding the approach of different categories to disclosing information as recommended by CRISA. While asset managers tend to be more compliant, only 30 percent of the pension funds reviewed provide any information at all.


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