The week in investor relations: Private markets, sponsored research and corporate purpose
– Dalia Blass, director at the SEC’s investment management division, called for pension funds to have access to private markets to help improve the diversification and performance of their investments, reported the Financial Times (paywall). ‘Private investments have the potential to provide stronger returns and diversification for investors, but come with both performance and liquidity risks,’ she said.
– Schroders CEO Peter Harrison said some companies are using the Covid-19 pandemic as an excuse to cut dividends when they don’t need to, noted the FT. Hundreds of companies have cut or cancelled dividends during the crisis. ‘There are examples of companies that might have paid dividends [in normal times] but are using this [crisis] as cover to not pay. It really does concern me,’ said Harrison.
– The use of sponsored research is growing in Europe amid continued fallout from Mifid II regulations, reported Bloomberg. The total number of analyst recommendations for European small caps has grown in each of the last two years, said Bloomberg, citing its own data, with sponsored research ‘partially’ responsible for the rise. Meanwhile, some European brokers are expanding their sponsored research offering.
– Hundreds of thousands of retail investors are using new fractional trading features offered by online stock brokers, according to the Wall Street Journal (paywall). Fractional trades are where investors don’t buy a whole share, just a part of one. They give retail investors access to companies where buying a whole share would be prohibitively expensive. Over the last year, Fidelity Investments, Interactive Brokers and Charles Schwab have rolled out the functionality.
– The WSJ noted that, while companies and employees initially embraced remote working, issues are now starting to emerge. ‘Projects take longer. Training is tougher. Hiring and integrating new employees, more complicated. Some employers say their workers appear less connected and bosses fear that younger professionals aren’t developing at the same rate as they would in offices, sitting next to colleagues and absorbing how they do their jobs,’ explained the article.
– The variety of thinking around what corporate purpose really means was considered in a post by Paul Lee on The Sense of Fairness blog. The article described how there remains little clarity on what corporate purpose is and how it should influence business practices. ‘If purpose is actually to deliver on its promise – in the terms used by this blog, fairer business and society – clarity is needed,’ wrote Lee.