Introduction

How are institutional investors’ strategic objectives being impacted by economic and political factors? In a global environment fraught with risk, to what degree are these investors able to act tactically while maintaining their long- term strategic focus?

The Economist Intelligence Unit (EIU) considers these issues in detail with a survey of senior institutional investors throughout Europe, the Middle East and Africa (the EMEA region) and analyses how different investor categories in different countries are responding to changing macroeconomic and regulatory environments and changing stakeholder objectives and pressures, as well as to current trends.

Institutional investors such as pension and insurance funds should have a strong incentive to hold assets, given the long-term nature of their liabilities. Evidence as to how they are reacting, however, is mixed. Concerns around the potential negative effects of holding a short-term focus are widespread, both within and outside the investment industry. There have been moves from governments, global institutions such as the OECD and the asset management industry itself to address this. Examples range from the UN Principles of Responsible Investment to the European

Insurance and Occupational Pensions Authority and the UK government-sponsored Kay Review.

We take a detailed look at how and to what extent investors seek to reconcile such high-level principles with their fiduciary duty to deliver stable returns while guarding against the repercussions of a political phenomenon, such as Brexit, or a financial one, such as the persistent asset-price impact of quantitative easing.

This white paper is part of a series called "Is short-term thinking on the rise?". Click Here to read the full series.