Investor initiative focuses on long-term approach
Apart from investing in more-liquid sectors such as REITs, investing in real estate typically is viewed as a long-term strategy. But the longer-term approach required for property investment can conflict with the short-term gains needed for pension fund investors, who must reconcile ongoing liability responsibilities to their plans’ retirees while dealing in global capital markets often driven by short-term action and reaction. Losses suffered during the global financial crisis put the short-term process and mindset under a microscope but, in the years since, fully implementing portfolio changes has been challenging, given belief systems that have influenced more traditional investment guidelines for decades.
An initiative called Focusing Capital on the Long Term aims to provide institutional investors with practical measures to help them build long-term investment strategies and portfolios. Founded by the Canada Pension Plan Investment Board and McKinsey & Co,