Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Definitive investor guide to governance
The ICGN, arguably the oldest and among the largest investor governance organisations in the world, will next month (July 8) launch a definitive guide to governance for asset managers and asset owners.
In the form of a 210-page e-book, titled ‘Governance, Stewardship and Sustainability: Theory, Practice and Evidence’, the guide seeks to add to the Global Governance Principles and Global Stewardship Principles on which the ICGN’s work program is based.
The International Corporate Governance Network was formed in 1995 with three main aims:
- Influence policy by providing a reliable source of investor opinion on governance and stewardship
- Connect peers at global events to enhance dialogue between companies and investors around long-term value creation, and
- Inform dialogue through education to enhance the professionalism of governance and stewardship practices.
The London-based organisation’s members speak for investor groups managing assets of about US$59 trillion as of 2020.
Kerrie Waring, ICGN chief executive, says in the book’s forward: “Now more than ever, society is questioning the role of corporations in society and their license to operate – this extends to the effectiveness of investors in holding them to account.
“This book provides an excellent roadmap in how this accountability is exercised and achieved and is particularly insightful, not only for investors, but also for companies and their advisors as they build understanding of investor expectations through stewardship.”
She says that the ICGN ‘Principles’ serve to remind everyone, as stated by the G20/OECD Principles from their 2015 meeting, that “stewardship is about preserving and enhancing long- term value as part of a responsible investment approach”.
Waring quoted: “This includes the consideration of wider ethical environmental and social factors as core components of fiduciary duty. In a broader context stewardship enhances overall financial market stability and economic growth.”
The e-book’s authors are George Dallas, ICGN’s London-based policy director and a former director of corporate governance at F&C Investments (now known as BMO Global Asset Management) and Washington-based Mike Lubrano, who advises on ICGN’s training courses and was the inaugural manager of the International Finance Corporation’s corporate governance unit.
Info and purchase details for the book and launch webinar on July 8 here.
