So it comes as no surprise that a contest being run in the UK to find the best way to run a portfolio in a socially responsible long-term way drew 88 entrants including some of the leading British money management firms, according to a Financial Times report.
A seven-member judging panel is expected to announce the winner Wednesday after winnowing down a short list of eight finalists including three from specialty investment houses and five from individuals, the newspaper said. The competition is sponsored by the Universities Superannuation Scheme, a UK pension fund, and consultant Hewitt Bacon & Woodrow.
Contests were asked to come up with an investment plan for a 20-year mandate of €30 billion.
Among the entries:
- Henderson Global Investors, a London-based investment house owned by AMP, of Australia, proposed dividing the portfolio into two: a €25 billion “core portfolio” with 50% in equities, 20% each in bonds and property, and 10% in private equity; and €5 billion “added value portfolio” that would “harvest alpha” through a series of absolute return sub-funds.
- Schroder Investment Management, London-based and independent, puts forward a plan for “dynamic asset allocation”. This would change continually, reflecting movements in liabilities and asset values. It would encourage the purchase of risky assets in rising markets and sales of these assets in falling markets – contrary to conventional wisdom. Given certain assumptions, the portfolio could comprise liability-matching assets such as bonds (25%), and “risk assets” such as large cap equities (30%), small cap equities (18.75%), private equity (15%) and high yield debt (11.25%).
- Sustainable Forest Systems is a US-based investment companies which creates and manages sustainable forests in the tropics, suggested a $500 million segment of the money should be invested in timber projects. It notes that trees, which typically live for 50 to 70 years, are, like people, a long-term biological asset. The strategy would be to invest in undervalued tropical hardwood forests in several countries.