Crucial role of long-term investors at risk

The role of long-term investors should not be compromised. A new joint publication by Swiss Re and the Institute of International Finance looks at eight issues and challenges currently faced by long-term investors.

Five years after the onset of the global financial crisis, policy actions have contributed to lower financial stress and more stable macroeconomic conditions. Looking ahead, however, the global economic outlook remains uncertain, with much of the regulatory reform agenda continuing to evolve – and with it the financial market system. Deleveraging remains a key longer-term factor, not only in the financial sector but also in the public sector.

The need for action

To restore long-term growth and wealth creation, public and private market leaders need to increase efforts to make the financial system more resilient. During this important process, the stabilising role of long-term investors needs to be duly taken into account to make financial markets more resilient and to provide the long-term funding which is needed for sustained growth. As they are able to provide risk capital to the real economy and are invested with a longer-term time horizon, they provide significant benefits to both the global economy and financial market stability. Long-term investors should not be made "short-sighted" – their role should be further strengthened, particularly given today's economic realities, which are unlikely to change without action.

Contributing to the discussion

Strengthening the role of long-term investors (PDF, 976 KB) is a new publication examining eight issues and challenges faced by long-term investors, including public financial repression, the regulatory environment, infrastructure investments, public sector debt restructuring and EU financial transaction tax. Produced by Swiss Re and the Institute of International Finance (IIF), the publication is linked to the work of the IIF's Council for Asset and Investment Management, chaired by Swiss Re's Walter Kielholz.

The eight fact sheets are intended to stimulate discussion and and raise awareness of the need to strengthen the role that long-term investors play in today's economy. "There are many valid approaches to these issues, but the biggest risk of failure is inaction" explains Jerome Haegeli, Head Investment Strategy at Swiss Re and one of the publication's authors.

Published 25 January 2013

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