The investment world is abuzz these days about “investment governance,” that intangible, entangled oversight of an institutional investor's pooled assets.
“Governance is an oft-overlooked, but essential ingredient of successful investment by institutions. It is overlooked in part because it is a "soft' factor that is not easily quantified and that depends on the attitudes of individuals and the interaction of senior fiduciaries in group settings,” according to a new report from investment manager Strategic Investment Group, Arlington, Va.
The report offers a self-evaluation tool that introduces a quantitative element to gauging good governance, said Deborah D. Boedicker, a partner at Strategic Investment Group.
The self-assessment survey focuses on five categories: mission awareness, governance structure, decision-making process, attitudes and biases, and controls. To pass the “good governance” test, pension fund fiduciary groups need a minimum of 60 points out of a possible 100.