UK - Pension funds need to be long-term shareowners with bigger stakes in smaller companies, said Oxford Investment Partners director Karl Sternberg.
“When you have bigger stakes, you can’t trade as easily, so you have to get closer to companies to act as owners,” explained Sternberg, who added pension funds should avoid a portfolio that was too broad.
“That is really an index hugging portfolio, where the only own stocks for, say, 6 months,” explained Sternberg.
“That is not acting as an owner. Rather they should have a focused portfolio where they own bigger stakes in smaller companies,. That way they can make a difference, by rattling the cage."
Sternberg stressed shareholders in general needed to be more active in the running of companies, and added: “All this is doable without any legislative change or government intervention. All it requires is a change in behaviour.”
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