MSCI conference considers hurdles to long-term investment

The MSCI Annual Conference on Global Investing and Risk Management, held in London this week, saw a heated panel discussion take on questions about the hurdles to long-term investing, particularly by investors who remain challenged by short-sighteness.

Moderated by Linda-Eling Lee, head of ESG Research at MSCI, the panel also included Mark Mansley, chief investment officer at the UK’s Environment Agency Pension Fund, and Rich Dell, partner and global head of equities at Mercer.

Mansley argued that one of the main challenges is to find long-term business metrics that shed light on the development of investments.

Dell added that there is a noticeable shift in information included on quarterly reports, which may help long-term investors.

“Quarterly reports are not just focusing on performance, and total contributors, but they also have more information on characteristics of funds, expectations…,” he said.

Dell pointed out another challenge for the fund industry players: identifying a framework which allows proper assessment of investment developments.

According to Andreas Hoepner, associate professor of finance at Henley Business School, from a scientific perspective, 60 weeks “is really the minimum” to track any performance down to the fund manager.

But one year and two months is far longer than the interval used to evaluate the performance of an asset portfolio. According to a poll among the conference attendees, more than 40% carry out an assessment every month, while 33% said results are reviewed quarterly.

About 40% of the audience considered that the most important factor impacting asset portfolios in the next ten years will be new technologies, while 25% said social dislocation will have the most impact.

“Somehow we are short-term biased because we think what affects us is what we see every day,” Enrico Massignani, chief risk officer at Generali Investments Europe, said.

“We are missing an important thing here, which is demographic changes… we are aging more, while the birthrate is down,” he said.

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