Today is national Ownership Day – what are the issues?12 March 2013
Ownership Day aims to encourage more active ownership of investments, and is a new annual event from UKSIF, the UK Sustainable Investment and Finance Association. There has been an increasing shift towards short termism in the investment world, to the detriment of investors and to society as a whole. A greater focus on long term thinking is a feature of green and ethical funds, together with active engagement with companies, in order to encourage higher standards in corporate governance, social and environmental issues.
Let’s imagine stock markets where long term thinking is the norm. That is surely the direction in which we would like the investment world to move. Global stock markets are powerful influencers of the largest companies in the world – and so they play a key role in creating the world we live in, and the world we bequeath to the next generation. We cannot afford short term thinking.
Constant trading is the natural companion of short term thinking, and currently, many investment funds buy and sell out of 100% of their underlying investments in a 12 month period. This level of trading incurs high costs, and those costs reduce the returns for investors – ISA investors and pension fund members alike.
Cultural change is definitely possible, and so are legal constraints on the increasing tendency to short-termism. Ideally we will see an element of both, and a wide-spread commitment to those changes. There are plenty of insights into the debate about what to do and why in the recent submissions made to the Department of Business, Innovation & Skills select committee hearing.
Tune into the hearing here, and hear views from active professional investors Aviva, the Railways Pension Fund, Invesco Perpetual, and from Penny Shepherd, CEO of UKSIF. http://www.parliamentlive.tv/Main/Player.aspx?meetingId=12728
Ownership Day has been organised by UKSIF – here’s wishing it success!
Tanya Pein (co-Chair of the Ethical Investment Association), writing in a personal capacity.
Investment specialist, advising charities and individuals, at In2 Consulting