Investor Trends and Impact for IR in 2017 & Beyond

Size: px

Start display at page:

Download "Investor Trends and Impact for IR in 2017 & Beyond"

Candace Lee
5 years ago
Views:

1 Investor Trends and Impact for IR in 2017 & Beyond

2 GROWTH IN PASSIVE VEHICLES CONTINUES SQUEEZE ON ACTIVE FUND MANAGERS o Growth in low cost ETFs over last few years; ETF AuM surpassed $4tn mark in April 2017 o Vanguard saw $142bn in inflows over the past year; more than any other investor. o The top 5 investors by inflows in 2016 are all Index or Quantitative Investors o High profile Active managers suffering redemptions o Fidelity Management & Research Company recorded redemptions of $88.3bn over the past 12 months o Other significant investors saw net outflows of more than $10bn including T. Rowe Price Associates, Capital World Investors and Wellington Mgmt. o Pockets of Outperformance and Stock pickers o Some well-known names e.g. Nuveen LLC (ex-tiaa Global Asset Management) (+$4.9bn), Harding Loevner LP (+$3.4bn), Royal London Asset Management Ltd. (+$2.5bn), Delaware Investments (+2.4bn) and INVESCO Asset Management Limited (+$2.2bn) 2

3 OWNERSHIP TRENDS ACROSS NORDICS HALF OF TOP TEN INVESTORS ARE PASSIVE United States Nordic 15% 6% 31% 19% United Kingdom Active Passive Rest of Europe Rest of World 23% 25% 81% Name Investment Style City Country BlackRock Institutional Trust Company, N.A. Passive San Francisco United States Folketrygdfondet Active Oslo Norway The Vanguard Group, Inc. Passive Malvern United States State Street Global Advisors (US) Passive Boston United States Norges Bank Investment Management (NBIM) Active Oslo Norway BlackRock Advisors (UK) Limited Passive London United Kingdom Schroder Investment Management Ltd. (SIM) Active London United Kingdom SAFE Investment Company Limited Active Central (Hong Kong) Hong Kong Nordea Funds Oy Active Helsinki Finland Legal & General Investment Management Ltd. Passive London United Kingdom * Recent activity is based on aggregated Nasdaq shareholder analysis data Passive and Active investors over the past six months from across Nasdaq's Nordic client base. 3

4 EAuM ($Bn) ENGAGING WITH PASSIVE INVESTORS UNDERSTANDING THE OPPORTUNITY $3,000 Top Ten Passive Investors by Equity Assets $2,642 $2,500 $2,000 $2,044 $1,500 $1,206 $1,000 $500 $359 $300 $240 $208 $168 $143 $137 $0 4

5 ENGAGING WITH PASSIVE INVESTORS INCREASING IMPORTANCE OF CORPORATE GOVERNANCE o Growth of index money has resulted in a new pattern of investing that focuses less on management and more on control. o IROs increasingly have to address this multifaceted layer of additional complexity. Because passive investors are unwilling to divest their positions in poorly performing stocks.they may place an even greater weight than active fund managers on ensuring effective governance in the firms they own Passive, but Powerful How Index Funds Exercise Their Clout. Wharton Magazine. April 23,

ENGAGING WITH PASSIVE INVESTORS WHO CAN IRO S REACH OUT TO? o Amra Balic is Head of BlackRock's EMEA Investment Stewardship team based in London for the past 8 years.

While we may have passive strategies, we re active owners, says Kumar. 1 Brunswick Review Spotlight on Shareholder Activism, 2015: https://www.brunswickgroup.

6 ENGAGING WITH PASSIVE INVESTORS WHO CAN IRO S REACH OUT TO? o Amra Balic is Head of BlackRock's EMEA Investment Stewardship team based in London for the past 8 years. o Engagement is an essential part of our stewardship activities. o Rakhi Kumar is head of corporate governance at State Street Global Advisors. While we may have passive strategies, we re active owners, says Kumar. 1 Brunswick Review Spotlight on Shareholder Activism, 2015: 2 IR Magazine: 6

7 ENGAGING WITH PASSIVE INVESTORS WHO CAN IRO S REACH OUT TO? o Rob Main leads Vanguard's Corporate Governance team that is responsible for company engagement, proxy research and voting, and ESG integration. o Vanguard is most likely to engage when it is: Preparing to vote at the shareholder meeting An event has occurred at the company that could affect stock value Its research has uncovered a specific governance concern that is not on the ballot Source: The Vanguard Group, Inc., 1 Source: The Vanguard Group, For the 12 months ended June 30,

ENGAGING WITH PASSIVE INVESTORS WHO CAN IRO S REACH OUT TO? o Sasha Sadan is Director of Corporate Governance at Legal & General Investment Management.

8 ENGAGING WITH PASSIVE INVESTORS WHO CAN IRO S REACH OUT TO? o Sasha Sadan is Director of Corporate Governance at Legal & General Investment Management. o Top themes discussed in governance meetings at Legal & General: 1. Board composition, e.g. diversity, board refreshment, quality, skills 2. Remuneration 3. Strategy 4. Nomination and succession 5. Climate change Source: Legal & General Investment Management, 8

VIEW FROM ACTIVE BUY-SIDE JPMorgan Asset Management o Rob Hardy is responsible for engaging with companies on governance and sustainability issues at JPMorgan Asset Management in London.

9 VIEW FROM ACTIVE BUY-SIDE JPMorgan Asset Management o Rob Hardy is responsible for engaging with companies on governance and sustainability issues at JPMorgan Asset Management in London. o Topics discussed in governance meetings at JPMorgan AM: 1. Succession Planning; are the right people on the board? 2. Cyber Security; brought up in every meeting this year 3. Supply Chain; what are the potential supply chain issues and is the board and management able to address these? o Tip for IROs in preparing a governance roadshow: 1. Know your board, their skillsets and recent topics discussed 2. Prepare a list of questions to ask about JPMorgan s approach to issues 9

10 UNDERSTANDING OPPORTUNITIES IN AN INCREASINGLY PASSIVE WORLD

11 LOOOKING AHEAD TOP ACTIVE INFLOWS IDENTIFYING NEW POOLS OF CAPITAL Firm Name 12 Month Flows 2Q17-2Q16 Style Country ($mn) 1 TIAA Global Asset Management $4,910 GARP United States 2 Harding Loevner LP $3,411 Growth United States 3 BMO Asset Management Inc. $2,931 GARP Canada 4 Royal London Asset Management Ltd. $2,516 Value United Kingdom 5 Victory Capital Management Inc. $2,391 Growth United States 6 Delaware Investments $2,366 Value United States 7 INVESCO Asset Management Limited $2,207 Value United Kingdom 8 Union Investment Privatfonds GmbH $2,011 Growth Germany 9 Guggenheim Investments $2,005 Value United States 10 Deutsche Asset Management Investment GmbH $1,901 GARP Germany 11 DNB Asset Management AS $1,855 Growth Norway 12 J O Hambro Capital Management Limited $1,824 Value United Kingdom 13 Schroder Investment Management North America Inc. $1,612 GARP United States 14 Magellan Asset Management Limited $1,559 Growth Australia 15 Handelsbanken Asset Management $1,554 Growth Sweden 16 Deka Investment GmbH $1,535 Growth Germany 17 Comgest S.A. $1,471 Growth France 18 Amundi Asset Management $1,417 GARP France 19 Polar Capital LLP $1,417 Other United Kingdom 20 Boston Partners $1,402 Value United States 11

12 LIMITATIONS OF SECTOR VIEW OF YOUR COMPANY Consumer Brand 1 Top 10 Investors Neuberger Berman Fidelity Management & Research Norges Bank Investment Management Capital World Investors Capital Research Global Investors Fayez Sarofim Blackrock Financial Management Northern Trust Global Investors Deutsche Asset Management Americas TIAA- CREF Consumer Brand 2 Top 10 Investors Capital World Investors T. Rowe Price Aberdeen Asset Management TIAA- CREF Norges Bank Investment Management Fidelity Management & Research Baron Fund Management American Century Investment Management Capital Research Global Investors Eagle Capital (New York) 12

13 HOW DO INVESTORS VIEW YOUR COMPANY? MACROECONOMIC GEOPOLITICAL SECTOR COMPANY FUNDAMENTALS 13

14 BEYOND SECTOR FOCUSED FUNDS? o To capture the larger pool of assets, you need to go beyond the sector Sector Specific $ Generalist $ 8x o According to Lipper mutual fund data, non-sector-specific mutual fund assets are nearly 8x larger than sector-specific assets 14

15 USING TECHNOLOGY TO PINPOINT INVESTOR OPPORTUNITIES Partner with your Nasdaq Advisory Targeting Team to identify invitees beyond your top 50 shareholders. Use Nasdaq IR Insight to identify firms and funds with upside to suggest to your broker 15

16 TIPS FOR IROS TO UNCOVER INVESTOR OPPORTUNITIES o Consider investors outside of your traditional peer group o Understand your company fundamentals and the types of funds that may be suitable investor targets o Leverage technology and insights about fund flows to understand current shareholders that have potential to buy more shares o Meet Generalist PMs within a firm where you already have a relationship with the sector analyst o Understand investor risk factors: i.e. saturation, sector rotation, outflows and peer activity evaluate possible at risk shareholders ahead of investor meetings o Work with your IR advisors and brokers to uncover 2 nd their and 3 rd tier investors, which may struggle to attain corporate access post MiFID II suggest their names for conferences to your broker 16

17 THANK YOU AND Q&A

Corporate Collaboration using Big Data and Technology. Patrick Hughes, Director Advisory Services Michael Keenan, IR Commercial Head, EMEA

Corporate Collaboration using Big Data and Technology Patrick Hughes, Director Advisory Services Michael Keenan, IR Commercial Head, EMEA Agenda orecent market trends oeuropean equity market performance