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May 17, 2024

Exclusive interview: Macro-risk specifics key topic in institutional investor-asset manager engagement

IROs can add value by sharing risk specifics, building confidence that is then relayed to investors

How does an institutional investor choose where to place its money? What are the factors that influence and direct these decisions and what are the trends in engagement? These are some of the questions that a new 200-page report seeks to answer.

It finds that there has been a ‘shift in the value of broad digital communications compared with highly targeted and in-person interactions when considering prospective asset managers’. Essentially, there is a renewed emphasis on personal engagements, though economical engagements remain fruitful.

Speaking exclusively to IR Magazine ahead of the report launch, Linda York, a senior vice president in Escalent’s Cogent Syndicated division, discusses how IROs can help provide asset managers with the information their own clients are looking for.

Linda York, a senior vice president in Escalent’s Cogent Syndicated division
Linda York, a senior vice president in Escalent’s Cogent Syndicated division

Noting how information is one of an asset manager’s most attractive prospects, York stresses that the research focus is on ‘institutional investors that are considering asset managers that may be then investing in public companies’. IR professionals are essentially a degree removed from the data.

York says: ‘But the information needed from companies that asset managers can then share with their potential clients – the institutional investors – are things like: how is your company going to be impacted or potentially impacted [by particular issues]? How are you fortifying your business in the current economy? Against the potential for geopolitical unrest? Or the impact of the US presidential election? How are you fortifying your company’s fundamentals so that you’ll sustain your business model?

‘Those investment managers then have confidence in your company – and they relay that confidence.’

Cogent Syndicated asked institutional investors about the type of content they’re interested in from asset managers. ‘Certainly, global market updates and economic outlooks are number one overall,’ says York. ‘They want to have that context for their current investments, that understanding of what likely effects of potential events are being anticipated or mitigated.’

Competitive intelligence and market intelligence

Recent research from IR Magazine, for A geopolitics playbook for IROs, finds that more than half of companies do not have a crisis-response plan that caters for a geopolitical event.

At Loblaw Companies, however, such a plan does exist. Roy MacDonald, vice president of IR, explained the firm’s approach in the playbook. ‘We have a crisis-response plan or playbooks for macroeconomic events. If something comes up on the government side or on the legal side, IR is kind of the go-to in the business to get a cohesive story together or to understand a situation, because we touch every part of the business,’ he said.

‘We have to be subject matter experts on every aspect of the business, whether it’s logistics, sales, financial planning or strategy, so we tend to get the call very early to help address competitive intelligence and market intelligence, and understand how this impacts the different parts of the business. Investor relations is very well positioned to step in and help lead those kinds of efforts, which is part of what makes the job exciting, too.’

Roy MacDonald, vice president of IR at Loblaw Companie
Roy MacDonald, vice president of IR at Loblaw Companie

Different types of investment solutions that can add either ‘some additional risk management, some additional opportunity for capitalizing on return potential or maximizing optimistic fixed income, for example, is another thing institutional investors are looking for from asset managers and the individual companies the asset managers choose to invest with,’ York adds.

Cutting through the noise

York says a key driver behind the US Institutional Investor Brandscape report, now in its 15th year, is to help asset managers cut through the increasing market noise and help them find their ‘unique voice’, particularly given the proliferation of webinars and podcasts.

‘There’s a lot of different types of thought leadership these asset managers are producing and conducting,’ she says. ‘And, frankly, a lot of it says the same thing, or a very similar shade of the same.’

Although the research points to in-person engagements between asset managers and their institutional clients – or potential clients – as most impactful, York says there is certainly a place for digital. It just depends on the state of the current relationship and what you want to achieve.

‘When we look at the post-pandemic optimal engagement model for this audience, we find it’s a combination of digital outreach, in-person outreach and some thought leadership,’ she explains. ‘Portfolio managers in the asset management space perhaps sharing their perspectives over webinars or in person: engagements that provide new thinking, something these institutional investors don’t already know – or something they think they know, but where an added-value perspective can help them optimize their institutional portfolio.’

Economical communications

And while face-to-face will always offer a deeper view, that’s not necessarily needed, or wanted, in today’s busy world. ‘Some [interactions] can be satisfied quite easily via an email – especially if you already have an established relationship,’ says York. ‘If [an institutional investor] is learning about a new manager or trying to test out a new theory for an investment strategy, a webinar can be very economical.’

Where in-person engagement offers the greatest value, according to York, is when an investor wants to go beyond performance or fees and find out whether an asset manager is the right fit for the organization. ‘There’s a qualitative aspect to an investment portfolio and that’s really where in-person interaction becomes more important,’ she says.

Garnet Roach

An award-winning journalist, Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of...