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Working paper finds that better disclosures are needed to assess long-term orientation of investment funds

last modified Mar 20, 2019 11:20 AM
20 March 2019 – The Investment Leaders Group found that the data necessary to enable institutional and retail investors to assess the long-term orientation of the investment funds is not currently available.

The Investment Leaders Group (ILG), in co-operation with the University of Cambridge Institute for Sustainability Leadership (CISL), has applied a new Long-term Disclosure Framework to assess whether investment companies are providing the information required to enable their customers to assess the long-term orientation of the fund.

Focusing on a small group of funds that explicitly identify themselves as ‘long-term’, the ILG concluded that the disclosures being provided by funds that identify themselves as ‘long-term’ are insufficient to enable their current or potential clients to assess whether they are actually operating in a long-term fashion. There are particular weaknesses in relation to investment beliefs and stewardship.

These findings are surprising given that, in many cases, the parent organisations have long-standing commitments to responsible investment, and report extensively on responsible investment in responsible investment reports and/or as part of the PRI reporting requirements. Yet, these disclosures are not referred to when describing or marketing these long-term funds.

Kajetan Czyz, Program Director at the Cambridge Institute for Sustainability Leadership, said:

 “At present it is very challenging to assess whether and how the aspiration in funds that present themselves as ‘long-term’ feed through to investment beliefs, and from there into objectives (financial and sustainability-related), investment processes, stewardship practices, performance monitoring and reporting”.


Access the report, and learn more about the work of the Investment Leaders Group.

 

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Faty Dembele, Senior Programme Manager, Investment Leaders Initiative