FCLTGlobal's "Institutional Investment Mandates: Anchors for Long-term Performance" homes in on how asset owners and asset managers can structure their relationship contractually to promote long-term investment goals.
Based on the insights of a working group of global asset owners and managers, the paper identifies a Top Ten list of investment management contract terms and conditions that bear on long-term or short-term behavior including the fees and fee structure, contract term, reporting provisions, and manager evaluation. A matrix captures how each of these contract terms and conditions is commonly addressed (which purportedly tends to reflect a short-term mindset), a proposed long-term-oriented alternative, and additional long-term-oriented "exploratory" provisions to consider. Another matrix suggests key performance indicators that asset owners may consider to evaluate asset managers with a view toward leading performance indicators in lieu of backward-looking returns.
See our prior report: "Investor Stewardship Practices: Tools & Templates" and additional information & resources on our Long-Termism/Short-Termism page. This post first appeared in the weekly Society Alert!