A number of global money managers are determined to show their commitment to focusing on the long term, with recent moves to combat short-termism in client reporting, investment and their own businesses.
Consultants say active money managers, eager to prove their worth, are working in tandem with the long-term investment horizons of their institutional investor clients. Schroders PLC, for example, which has £416.3 billion ($536.2 billion) in assets under management and administration, recently announced it would only issue full financial reports at the end of the second and fourth quarters, restricting information for the first and third quarters to changes in assets.
“We believe that the excessively frequent reporting, and subsequent management of financial performance, increases the pressure to make short-term decisions,” said a statement provided by a spokeswoman. “We are a company focused on long-term, sustainable growth and therefore we have taken” this decision.
The statement cited a 2012 report by British economist and author John Kay, which concluded that excessively frequent reporting puts pressure on decision-making. U.K. policymakers responded by changing regulations to allow U.K. companies to report less frequently.
“In light of these developments, (we) have changed the way we report and we want to encourage the companies in which we invest to review their approach to reporting quarterly earnings,” the Schroders statement said.
Shareholders were supportive, added the statement, and analysts understood the rationale. “However, we do appreciate that sell-side analysts are obliged to work on shorter time horizons,” and for that reason, Schroders continues to provide updates on assets under management and administration by segment and channel at the end of the first and third quarters, the statement said.