Equity mandates can hit long-term investing

Michael Bow, writing in Global Pensions on 14 April 2011, reports Aviva Investors' claim that gearing equity mandates towards outperforming quarterly benchmarks could be undermining attempts to improve long-term investing.

The investment manager said building structural requirements – such as equity benchmark tracking errors – into mandates often clashes with attempts to maintain long-term investment decisions.

Aviva: “We believe we have educated our clients to understand we may not outperform the benchmark every quarter because we are a long-term rather than a short-term investor.”

Aviva predicted an increase in engagement from investors as the UK Stewardship Code (a standard for responsible investing) pushed more managers to ask tougher question of the companies they invest in.

Read the full article here.