UK - Schemes will increase their effectiveness as owners of corporate Britain if they adopt long-term mandates, a think-tank report claims.
It believes schemes should appoint fund managers on a seven to 10-year basis and says the UK’s biggest institutional investors are failing in their responsibilities as the owners of companies.
The Tomorrow’s Company report – Restoring trust: Investment in the 21st century – is the culmination of its two-year inquiry into the UK investment system.
The inquiry was led by former GlaxoSmithKline chairman Sir Richard Sykes who believes this can be remedied if trustees focus on mandates for the longer-term allowing fund managers to engage with companies more effectively and boost their future performance prospects. At the same time, it would boost demand for “credible research” into the long-term potential of companies.
He said that at present, the majority of research was concentrated on larger companies.
Sir Richard also said investors would be more effective as owners of corporate Britain if they pooled their resources.
He believes the top five to 10 shareholders of any company should pool their resources and work together on an ongoing basis. This, he said, would foster closer ties with the firm in which they invested.
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