Institutions join club to push for long term vision

Tim Wallace
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Sacha Sadan drove the group’s creation
A DOZEN investment industry heavyweights yesterday promised to band together to promote a long-term approach to business in the companies in which they invest.

Creating the Investor Forum was one of the recommendations made by Professor John Kay in his review of the equities markets two years ago.

It is the latest step in a series of moves to encourage executives in businesses to focus on long term goals rather than short term returns.

These include abandoning the requirement for quarterly reporting, a step which kicks in next month.

But the group is also assembling a panel of lawyers in a bid to make sure they do not stray beyond the boundaries of discussion between rival groups of investors.

One risk is that a group of investors in one firm could appear to be acting in concert, in breech of governance and takeover rules.

Another concern is that small investors could be squeezed out, if the already enormous institutional funds join together to wield even more heft.

But Vince Cable argued steps taken since the crisis have already helped reduce the focus on short term results.

“If you look back over the past few years there has actually been a fall in median chief executive pay, by five per cent in 2012 and seven per cent in 2013,” said the business secretary.

“We do sense that companies are much more alert to the interests of their shareholders on pay.”

The board of the group includes Legal and General’s Sacha Sadan, Aberdeen Asser Management’s Anne Richards, and the Jupiter Asset Management’s Edward Bonham Carter.