Large institutional investors aim to set example for others with long-term investing approach
The Canada Pension Plan Investment Board (CPPIB) is leading a group of six institutional investors that have earmarked $2 bn for investment in companies on a new index of firms that focus on long-term strategies, good corporate governance and other measures, media reports.
The six institutions aim to set an example for other investors by investing heavily in tracking the S&P Long-Term Value Creation (LTVC) Global Index, which includes 246 companies that meet criteria for return on investment, governance, leverage and other areas, the Wall Street Journal reports.
‘We are trying to use the index to change corporate behavior,’ says Mark Wiseman, chief executive of the CPPIB, in an interview with the newspaper, adding that he hopes retail products will also be created so that retail investors can track the index.
The CPPIB, which helped create the index, aims to invest almost $1 bn in tracking it, Wiseman says. The rest of the investment will come from Singapore sovereign wealth fund GIC, Danish pension plan ATP, Dutch pension plan PGGM, the New Zealand Superannuation Fund and the Ontario Teachers’ Pension Plan.
The index, which was launched in Davos, Switzerland, last week, was created by combining qualitative and quantitative measures into a single metric meant to determine a company’s potential to create value in the long term, says S&P Dow Jones Indices, in a press release announcing the launch. The metric takes into account RobecoSAM economic dimension scores to gauge corporate governance.
‘Over the past few years, there has been an intensifying investor demand for a benchmark that captures companies that take a long-term approach to making business decisions,’ says Alex Matturri, CEO of S&P Dow Jones Indices, in the release. ‘The launch of the S&P LTVC Global Index is a manifestation of the long-termism concept with an independent and transparent approach.’