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BerndaleCapital.com Review

Website is down. Company seems to be out of business.

About BerndaleCapital.com

BerndaleCapital is a forex broker. Berndale Capital offers the MetaTrader 4 and Mobile forex trading top platform. BerndaleCapital.com offers over 60 forex currency pairs, stock indices and crude oil,for your personal investment and trading options.

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Consumer Reviews

All that has account with Berndale Capital needs to report them to ASIC/AFCA asap.

They are ignoring calls and emails, not processing withdrawals.

Went to their registered address, it is just a reception desk which only let you leave message for them.

My account has been disabled today without any notification.

Looks like they are now taking our money and run.

I had much the same experience with Berndale. I deposited money with them and traded for just under one year.

I then requested a full withdrawal with no response for over a week. I then got a call and they told me that because I was running an EA I was in breach of their PDS and they would only return my initial deposit – they would keep the profit. Out of curiosity I asked how much profit was in the account? They said “umm 27% of the account I think?” I then informed them that this was impossible and that there was only 7% profit in the account. I sent my bank account statements to prove this.

There was then no response.

For the next three weeks I rang them everyday and emailed them about 10 times. The emails were not responded to and no one over the phone could help me.

I then contacted ASIC and AFCA and they gave me the contact details of the General Manager at Berndale and advised I place an official complaint with him. In Berndale’s defense, when I contacted him he was very apologetic and actioned my withdrawal immediately.

If he didn’t AFCA was going to handle the matter going forward in accordance with their external disputes resolution scheme.

In sum, I would NEVER give them money going forward. Unbelievable how such a large and seemingly reputable company can be so unorganized and useless.

SCAM. They ignore withdrawal requests. Most likely they are insolvent and getting worse with time.

I did finally recover my money after many long distance phone calls ($200 worth). Each time they said they would take care of the withdrawal and did not.

Also server went off line for two days (unacceptable for a forex broker). When it came back online two of my profitable trades disappeared.

DO NOT GIVE THESE GUYS YOUR MONEY YOU WILL NOT GET IT BACK!

Determination
Case No: 538803 Determination Page 1 of 4
Case number: 538803 19 October 2020
1 Overview
1.1 Dispute
On 6 June 2020 the applicant opened an account with the financial services provider (FSP). This dispute is about the applicant’s instructions to the FSP on 24 July 2020 to withdraw the balance in the account in the amount of EUR10,001.38 (the funds).
The applicant seeks for the FSP to honour the withdrawal request.
1.2 Issues and key findings
Is the FSP required to process the applicant’s withdrawal request?
The FSP is required to process the withdrawal requests because:
• The applicant provided sufficient information to show the withdrawal request was made, he had (and continues to have) sufficient funds in his trading account.
• The FSP has not identified any valid reason for not transferring the applicant’s funds to his bank account.
What loss did the FSP’s breach cause the applicant?
The FSP’s breach caused the applicant loss of EUR10,001.38.
1.3 Determination
This determination is in favour of the applicant.
The FSP must, within 28 days of the applicant’s acceptance of the determination, pay the applicant EUR10,001.38 plus interest as set out in section 2 of this Determination.
Case No: 538803 Determination Page 2 of 4
2 Reasons for determination
2.1 Is the FSP required to process the applicant’s withdrawal request?
The applicant traded the FSP’s margin fx products
The applicant was the FSP’s customer and traded margin fx contracts issued by the FSP. This trading was governed by a contract between the parties in the form of the FSP’s terms and conditions.
The FSP has not provided he FOS with a copy of its terms and conditions despite requests from FOS for this information. Typically, the terms and conditions would set out the FSP’s withdrawal processes and identify factors which may cause the FSP to not act on a withdrawal request.
The applicant has the onus of proving the claim
The applicant has the onus of establishing:
• the applicant made the withdrawal requests
• the FSP received the withdrawal requests
• the withdrawal requests contained sufficient information for the FSP to act upon
• the applicant had sufficient funds in his accounts
• the funds were not received from the FSP into the bank account nominated in the withdrawal form.
The FSP has the onus of proving reasons for not processing the withdrawal
Once the above matters are established, the onus shifts to the FSP to identify and prove a contractual or other reason for not paying the funds into the applicant’s nominated bank account.
FOS may draw an adverse inference
The applicant generally bears the onus of proving, on the balance of probabilities, that the FSP breached an obligation owed to him and that the breach caused him to suffer a loss.
In a court of law, the parties are required to produce all relevant documentation. A failure to do so is a contempt of court. As an external dispute resolution scheme, the Financial Ombudsman Service (FOS) has no such powers. Instead, it requires the parties to abide by their contractual obligations as set out in the Terms of Reference (TOR).
The TOR requires the parties to produce information requested by FOS. FOS may draw an adverse inference if a party to a dispute fails to comply with a request for information, without reasonable excuse.
The Operational Guidelines (Guidelines) to the TOR explain that an adverse inference may be that the withheld information:
• does not favour the party who has failed to provide the requested information; or
Case No: 538803 Determination Page 3 of 4
• undermines their position.
The Guidelines state it is not necessary for FOS to specify, in advance of a failure to comply with a FOS request, exactly what inference FOS will draw from the failure.
The FSP has failed to respond to any of FOS’s information requests. Where appropriate, I have drawn adverse inferences against the FSP that its failure to respond has meant it is not able to substantiate its position.
The FSP opened a trading account for the applicant
By email dated 6 June 2020, the FSP confirmed that an account had been created for the applicant on their server. The applicant ordered a bank transfer in the amount of EUR10,000 the same day.
FOS has requested from the FSP the terms of the account and the account trading history together with balances in the account. The FSP has not responded with this information request.
The applicant followed the FSP’s withdrawal process
The applicant has provided the following information to FOS:
• details of his Funds Withdrawal Form dated 24 July 2020
• a copy of a report showing a full history of the account held with the FSP.
The report shows that the applicant had sufficient funds to meet the withdrawal request as at 24 July 2020. It shows an account balance in the amount of EUR10,001.38. The report also shows that the applicant had no open positions at that time. I accept this amount is owed to the applicant.
On 24 July 2020 the applicant submitted a Funds Withdrawal Form to withdraw the balance in the account. Since then, the applicant has sent several emails to the FSP following up on his withdrawal request without success. There is no evidence of a reply from the FSP.
One of the emails was sent by the applicant on 22 August 2020. The applicant has provided FOS with an email dated 23 August 2020 showing the FSP read this email. In the absence of any submissions by the FSP to the contrary, I am prepared to accept that it received the withdrawal request and follow up emails.
The FSP has not provided any valid reason for not transferring the funds
Given that the FSP has not provided me with information about the account type, it’s trading history and emails (among other things), I draw an adverse inference that the information withheld from me does not favour the FSP or it undermines their position.
It follows that the FSP has not demonstrated any reasonable basis for the delayed withdrawal. By failing to process the withdrawal request, the FSP has not followed instructions in circumstances where the applicant has made his intention clear to withdraw the funds from the account.
I am persuaded that the applicant should receive the balance remaining in his account in the amount of EUR10,001.38.
Case No: 538803 Determination Page 4 of 4
2.2 What loss did the FSP’s breach cause the applicant?
The FSP’s still owes the applicant EUR10,001.38
Compensation for loss does not automatically follow a finding that the FSP has breached the law. The onus is on the applicant to establish, on the balance of probabilities that the FSP breached its duty, the applicants suffered a loss, and the breach caused the loss.
I accept that if the FSP did not breach its obligations to process the applicant’s withdrawal request, the applicant would have received his monies shortly after 24 July 2020 or within 48 hours in accordance with the industry practice.
The FSP is required to pay the applicant EUR10,001.38.
It is fair to award interest
To maintain the real value of the applicant’s compensation, I consider that it is fair that the FSP pay interest equivalent to the change in the ABS Consumer Price Index1 from 26 July 2020, the date the FSP ought to have transferred to the applicant EUR10,001.38 to the date of payment under this Determination.
3 Supporting information
3.1 Process
I have determined this dispute based on what it believes is fair in all the circumstances. In doing so I have regard to the relevant law, good industry practice, codes of practice and previous FOS decisions (but are not bound by these). I have taken into account relevant material submitted by the parties.
I am satisfied there has been a full exchange of relevant documents relied on to make this determination and that each party has had the opportunity to address any issues raised by the other. In particular, I am satisfied that the FSP has had numerous opportunities to make submissions.
This dispute has been expedited to a determination due to the FSP’s failure to make a substantive response to the issues in dispute. No recommendation was issued.
Dr June Smith
Lead Ombudsman
Financial Ombudsman Service Australia

Aug 3, 2020 – 1 Star I have made a request for repayment on 07/24/2020 and until today no reaction. conditions are not as advertised

My last review was that their spread costs were fairly high but that was because they have two types of paired instruments. At first I tried eurusd pair but after the last review, I found eurusd.b. All those pairs ending with the suffix “.b” are some of the most aggressive spread costs I have ever seen. And because of that I have increased my evaluation to 4 stars.

Oct 5, 2020 – 3 Stars I agree with you totally FPA, and no hard feelings James!
I trade EU nad one thing I could not miss noticing since the neir new installation are the high spread costs (1.7 before commissions) right during the Euro session today. I therefore lower my assessment to no more than 3 stars.

Oct 4, 2020 – 5 Stars To James from the UK, look I am giving them a 5 stars and I am not a fake out there. I really live in Montreal Canada, BerndaleCapital does not pay a penny for anything I write in here. I am just another trader. Whereas you, James, you are making suggestions based on nothing. It is your testimony that is at risk of being discarded as true. You sign as a guest! Are at the employ of competitor broker. I am a registered user in this forum and I am a live client at BerndaleCapital. What are your motives to give a 1 star when you sign in as a guest? If you have something real to say then say it! Not just accusations thrown into the wind.

Oct 3, 2020 – 5 Stars With regards to my previous entry, I got my new credentials and was able to re log in to my live account. It just took longer than expected to install that new technology at BernadaleCapital’s end. I should have been more patient since sometimes installation of new technology may take longer than anticipated (I should know as a former programmer analyst) and I also should have taken into account the time difference between Merlbourne and Montreal. I apologize to BerndaleCapital if I may have raised suspicion when all they did is act in kindness and professionalism. It is I who showed impatience. This is why I am giving them a 5 stars.

Oct 2, 2020 – No Rating I could not login on Monday Oct 01 broker time (Sunday Sep 30 EST/EDT) I wrote to my manager and she told me that they were installing new technology and that I would be getting new login details withing the next 2 hours. That was almost 2 days ago. If this is happening to all their client base then I am just going to wait for this long installation to be completed, but if I am singled out I would want to know why.

2020-10-04 Review Moderation Team Note
For the record, James left his review before your first 5 Star review was approved. Nonetheless, the FPA believes that the claim by James that all the 5 star reviews are fakes from the company is incorrect.

The FPA goes to great efforts to screen all reviews, positive and negative. It is possible a few fakes can slip through, but we believe the overwhelming majority of reviews displayed on the FPA’s website are honest experiences of real traders. In cases where fakes submitted by a company are discovered, those get notes to let people know and are set to Zero stars.

We would like to ask all reviewers to focus on their own experiences. Just because one client reports a bad experience does not automatically mean everyone had the same problem. Just because one client reports a good experience does not mean that all clients never have had or never will have any problems. The FPA has seen low rated companies improve their ratings over time. The FPA has seen well rated companies turn around and steal money from some or all of their clients.

If you have a good experience with a company, leave a review and tell everyone why. If you have a bad experience with a company, leave a review and tell everyone why. If it’s a very bad experience, you can also open a thread in the Scam Alerts folder of the FPA’s forums. If your experience changes, as jpdlegault’s did, leave a followup review with the rating you feel the company now deserves. Your old review will be nested beneath the new one and only the new rating will count towards the company’s average.

The FPA will be very grateful is this is the end of any arguments between reviewers on this review page.

Finance English practice: Unit 28 — Venture Capital

  • Complete the sentences below. Use the key words if necessary.
    • Raising capital

    Alex Rodriguez works for a venture capital company:

    ‘As you know, new business, called , are all that aren’t allowed to sell stocks or shares to the general public. They have to find other ways of raising capital. Some very small companies are able to operate on money their — the people who start the company — have previously saved, but larger companies need to get capital from somewhere else. As everybody knows, banks are usually . This means they are unwilling to lend to new companies where there’s a danger that they won’t get their money back. But there are firms like ours that specialize in finding : funds for new enterprises.

    Some venture capital or risk capital companies use their own funds to lend money to companies, but most of them raise capital from other financial institutions. Some rich people, who banks call , and who we call or , also invest in start-ups. Although new companies present a high level of risk, they also have the potential for rapid growth — and consequently high profits — if the new business is successful. Because of this profit potential, institutions like pension funds and insurance companies are increasingly investing in new companies, particularly hi-tech ones.’

    Note: Venture capital is also called or .

    Return on capital

    ‘Venture capitalists like ourselves expect — people with an idea to start a new company — to provide us with a .

    Because of the high level of risk involved, investors in start-ups usually expect a higher than average — the amount of money the investment pays — on their capital. If they can’t get a quick return in cash, they can buy the new company’s shares. If the company is successful and later becomes a , which means it is listed on a stock exchange, the venture capitalists will be able to sell their shares then, at a profit. This will be their .

    Venture capitalists generally invest in the early stages of a new company. Some companies need further capital to expand before they join a stock exchange. This is often called , and usually consists of — bonds than can later be converted to shares — or that receive a fixed dividend. Investors providing money at this stage have a lower risk of loss than earlier investors like us, but also less chance of making a big profit.’

  • British English or American English?
    • preference shares
      • British English
      • American English

    • preferred stock
      • American English
      • British English

  • Complete the sentences with correct words.
    • A firm listed on a stock exchange is a . . .

      Tior Capital

      Tior Capital – международный брокер, предоставляющий доступ к онлайн-трейдингу на финансовых рынках. Компания с 2020 года имеет лицензию регулирующего органа республики Вануату (VFSC), номер – 14391. Главный сайт переведен на два языка: английский, русский.

      Tior Capital предоставляет сегрегированные торговые счета. Их главная задача — обеспечение защиты капитала трейдера в любых форс-мажорных ситуациях путем изолированного хранения средств.

      Еще одним преимуществом Тиор Кэпитал является технология STP/ECN/NDD, что исключает конфликт интересов дилингового центра и клиента за счет вывода сделок на межбанковскую ликвидность. Поставщики котировок брокера – RBS, SEB, Society General, Standard Chartered, Swedbank, Stadard Bank.

      После прохождения регистрации личного кабинета, вам предстоит выбор типа торгового счета. В Tior Capital их 3 разновидности:

      1) Классический мини. Простой, легкий способ для старта торговли с депозитом от 100$.

      2) Крипто Классик. Для опытных трейдеров, которые желают торговать не только стандартные активы, но и криптовалюты.

      3) Pro-STP. Этот тип счета подойдет для крупных, профессиональных трейдеров.

      Торговые условия в Tior Capital:

      – Минимальный депозит 100$;

      – Максимальное кредитное плечо до 1:500;

      – Спрэды от 0,1 пипса;

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      – 4 разных валюты счета: USD, EUR, BTC, XAU;

      – Отсутствие комиссии за обслуживание и содержание счета;

      – Минимальный объем лота 0,01;

      – Сверхбыстрое исполнение ордеров;

      – Более 70 торговых инструментов;

      – Разрешено: скальпинг, хеджирование, алгоритмическая торговля;

      Кроме всего этого Tior Capital предоставляет набор необходимых инструментов и материалов для фундаментального, технического анализа, постоянно обновляемый раздел аналитики с актуальными обзорами от профессионалов рынка Форекс, обеспечивающих максимально эффективную торговлю. Материалы предоставляются независимыми аналитическими агентствами.

      Для работы с рынком компания предлагает собственную современную платформу, обладающую всем нужным функционалом.

      Перед пополнением депозита следует ознакомиться с регламентом, пользовательским соглашением, документом о рисках. Ввод и вывод средств производится на одни и те же реквизиты. Для снятия денег обязательно прохождение идентификации трейдера. Для этого нужно загрузить документ, удостоверяющий личность человека, например, паспорт, водительское удостоверение. Обработка заявок до 2 суток.

      Допустимые платежные системы: банковский перевод, банковские карты Visa/Mastercard, Skrill и другие электронные платежные системы.

      Focusing Capital on the Long Term

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      January–February 2020 Issue

      Executive Summary

      Since the financial crisis of 2008, there has been widespread agreement on the need for public companies to build value for the long term. Nonetheless, because of pressure from financial markets, a detrimental focus on short-term performance persists. Reversing this trend, the authors say, depends on the leadership of major asset owners such as pension funds, insurance firms, and mutual funds. They should act by taking four practical, proven steps:

      Define long-term objectives and risk appetite, and invest accordingly.

      Major asset owners should set a multiyear time frame for creating value, decide how much underperformance they can tolerate in the short term, and then align their investments with this agenda.

      Practice engagement and active ownership.

      Big investors should cultivate ongoing relationships with the companies they invest in, collaborating with management to optimize corporate strategy and governance.

      Demand long-term metrics from companies to improve investment decision making.

      Rather than focusing on quarterly financial statements, investors should seek to obtain and analyze data that indicate a company’s long-term health.

      Structure institutional governance to support a long-term approach.

      Big investors must have competent board members committed to investing for the long term, as well as policies and mechanisms to translate this philosophy into action.

      Idea in Brief

      The Problem

      Calls in the past five years for corporate leaders to abandon their focus on maximizing short-term financial performance have been ineffective. The ongoing short-termism in the business world is undermining corporate investment, holding back economic growth, and lowering returns for savers.

      Who Should Lead Change?

      Action must start with large asset owners such as pension funds, mutual funds, insurance firms, and sovereign wealth funds. If they adopt investment strategies aimed at maximizing long-term results, then other key players—asset managers, corporate boards, and company executives—will likely follow suit.

      Making It Happen

      Big investors can take four proven, practical steps: (1) Define long-term objectives and risk appetite, and invest accordingly. (2) Practice engagement and active ownership. (3) Demand long-term metrics from companies to inform investment decisions. (4) Structure institutional governance to support a long-term outlook.

      Since the 2008 financial crisis and the onset of the Great Recession, a growing chorus of voices has urged the United States and other economies to move away from their focus on “quarterly capitalism” and toward a true long-term mind-set. This topic is routinely on the meeting agendas of the OECD, the World Economic Forum, the G30, and other international bodies. A host of solutions have been offered—from “shared value” to “sustainable capitalism” —that spell out in detail the societal benefits of such a shift in the way corporate executives lead and invest. Yet despite this proliferation of thoughtful frameworks, the shadow of short-termism has continued to advance—and the situation may actually be getting worse. As a result, companies are less able to invest and build value for the long term, undermining broad economic growth and lowering returns on investment for savers.

      Taking the Long View: GIC invests with a 20-year time horizon for value creation.

      The main source of the problem, we believe, is the continuing pressure on public companies from financial markets to maximize short-term results. And although some executives have managed to ignore this pressure, it’s unrealistic to expect corporate leaders to do so over time without stronger support from investors themselves. A crucial breakthrough would occur if the major players in the market, particularly the big asset owners, joined the fight—something we believe is in the best interests of their constituents. In this article we lay out some practical approaches that large institutional investors can take to do this—many of which are already being applied by a handful of major asset owners.

      The Intensifying Pressure for Short-Term Results

      One of us (Dominic Barton) previously wrote about the need to “fight the tyranny of short-termism” (see “Capitalism for the Long Term,” HBR March 2020), and over the past few years both our organizations have been monitoring the debate on short-termism. Early in 2020 McKinsey and the Canada Pension Plan Investment Board (CPPIB) conducted a McKinsey Quarterly survey of more than 1,000 board members and C-suite executives around the world to assess their progress in taking a longer-term approach to running their companies. The results are stark:

      • 63% of respondents said the pressure to generate strong short-term results had increased over the previous five years.
      • 79% felt especially pressured to demonstrate strong financial performance over a period of just two years or less.
      • 44% said they use a time horizon of less than three years in setting strategy.
      • 73% said they should use a time horizon of more than three years.
      • 86% declared that using a longer time horizon to make business decisions would positively affect corporate performance in a number of ways, including strengthening financial returns and increasing innovation.

      What explains this persistent gap between knowing the right thing to do and actually doing it? In our survey, 46% of respondents said that the pressure to deliver strong short-term financial performance stemmed from their boards—they expected their companies to generate greater earnings in the near term. As for those board members, they made it clear that they were often just channeling increased short-term pressures from investors, including institutional shareholders.

      That’s why we have concluded that the single most realistic and effective way to move forward is to change the investment strategies and approaches of the players who form the cornerstone of our capitalist system: the big asset owners.

      Practical Changes for Asset Owners

      The world’s largest asset owners include pension funds, insurance firms, sovereign wealth funds, and mutual funds (which collect individual investors’ money directly or through products like 401(k) plans). They invest on behalf of long-term savers, taxpayers, and investors. In many cases their fiduciary responsibilities to their clients stretch over generations. Today they own 73% of the top 1,000 companies in the U.S., versus 47% in 1973. So they should have both the scale and the time horizon to focus capital on the long term.

      But too many of these major players are not taking a long-term approach in public markets. They are failing to engage with corporate leaders to shape the company’s long-range course. They are using short-term investment strategies designed to track closely with benchmark indexes like the MSCI World Index. And they are letting their investment consultants pick external asset managers who focus mostly on short-term returns. To put it bluntly, they are not acting like owners.

      The result has been that asset managers with a short-term focus are increasingly setting prices in public markets. They take a narrow view of a stock’s value that is unlikely to lead to efficient pricing and collectively leads to herd behavior, excess volatility, and bubbles. This, in turn, results in corporate boards and management making suboptimal decisions for creating long-term value. Work by Andrew Haldane and Richard Davies at the Bank of England has shown that stock prices in the United Kingdom and the United States have historically overdiscounted future returns by 5% to 10%. Avoiding that pressure is one reason why private equity firms buy publicly traded companies and take them private. Research, including an analysis by CPPIB, which one of us (Mark Wiseman) heads, indicates that over the long term (and after adjustment for leverage and other factors), investing in private equity rather than comparable public securities yields annual aggregate returns that are 1.5% to 2.0% higher, even after substantial fees and carried interest are paid to private equity firms. Hence, the underlying outperformance of the private companies is clearly higher still.

      Simply put, short-termism is undermining the ability of companies to invest and grow, and those missed investments, in turn, have far-reaching consequences, including slower GDP growth, higher unemployment, and lower return on investment for savers. To reverse this destructive trend, we suggest four practical approaches for institutional investors serious about focusing more capital on the long term.

      1. Invest the portfolio after defining long-term objectives and risk appetite.

      Many asset owners will tell you they have a long-term perspective. Yet rarely does this philosophy permeate all the way down to individual investment decisions. To change that, the asset owner’s board and CEO should start by defining exactly what they mean by long-term investing and what practical consequences they intend. The definition needs to include a multiyear time horizon for value creation. For example, Berkshire Hathaway uses the rolling five-year performance of the S&P 500 as its benchmark to signal its longer-term perspective.

      Just as important as the time horizon is the appetite for risk. How much downside potential can the asset owner tolerate over the entire time horizon? And how much variation from the benchmark is acceptable over shorter periods? Short-term underperformance should be tolerated—indeed, it is expected—if it helps achieve greater long-term value creation. Singapore’s sovereign wealth fund, GIC, takes this approach while maintaining a publicly stated 20-year horizon for value creation. The company has deliberately pursued opportunities in the relatively volatile Asian emerging markets because it believes they offer superior long-term growth potential. Since the mid-2000s GIC has placed up to one-third of its investments in a range of public and private companies in those markets. This has meant that during developed-market booms, its equity holdings have underperformed global equity indexes. While the board looks carefully at the reasons for those results, it tolerates such underperformance within an established risk appetite.

      Benefiting from Active Engagement: For companies CalPERS worked closely with, collective returns exceeded industry benchmarks by 12%.

      Next, management needs to ensure that the portfolio is actually invested in line with its stated time horizon and risk objectives. This will likely require allocating more capital to illiquid or “real” asset classes like infrastructure and real estate. It may also mean giving much more weight to strategies within a given asset class that focus on long-term value creation, such as “intrinsic-value-based” public-equity strategies, rather than momentum-based ones. Since its inception in 1990, the Ontario Teachers’ Pension Plan (OTPP) has been a leader in allocating capital to illiquid long-term asset classes as well as making direct investments in companies. Today real assets such as water utilities and retail and office buildings account for 23% of OTPP’s portfolio. Another believer in this approach is the Yale University endowment fund, which began a self-proclaimed “revolutionary shift” to nontraditional asset classes in the late 1980s. Today the fund has just over 35% in private equity and 22% in real estate.

      Finally, asset owners need to make sure that both their internal investment professionals and their external fund managers are committed to this long-term investment horizon. Common compensation structures like a 2% management fee per year and a 20% performance fee do little to reward fund managers for long-term investing skill. A recent Ernst & Young survey found that although asset owners reported wanting annual cash payments to make up only 38% of fund managers’ compensation (with equity shares, deferred cash, stock options, and other forms of compensation accounting for the rest), in practice they make up 74%. While many institutions have focused on reducing fixed management fees over the past decade, they now need to concentrate on encouraging a long-term outlook among the investment professionals who manage their portfolios. CPPIB has been experimenting with a range of novel approaches, including offering to lock up capital with public equity investors for three years or more, paying low base fees but higher performance fees if careful analysis can tie results to truly superior managerial skill (rather than luck), and deferring a significant portion of performance-based cash payments while a longer-term track record builds.

      2. Unlock value through engagement and active ownership.

      The typical response of many asset owners to a failing corporate strategy or poor environmental, social, or governance practices is simply to sell the stock. Thankfully, a small but growing number of leading asset owners and asset managers have begun to act much more like private owners and managers who just happen to be operating in a public market. To create value, they engage with a company’s executives—and stay engaged over time. BlackRock CEO Laurence Fink, a leader in this kind of effort, tells companies not to focus simply on winning over proxy advisory firms (which counsel institutional investors on how to vote in shareholder elections). Instead, says Fink, companies should work directly with BlackRock and other shareholders to build long-term relationships. To be clear, such engagement falls along a spectrum, with varying levels of resources and commitment required (see the sidebar “The Equity Engagement Spectrum”). But based on their in-house capabilities and scale, all asset owners should adopt strategies that they might employ individually or collaboratively.

      The Equity Engagement Spectrum

      Asset owners are developing a range of approaches to engaging with companies in which they have equity investments. As the size of their stake rises, they move from monitoring and coalition building to acting like owners, often with board representation.

      Ownership stake in company: 10%

      Relationship investing

      • Takes a significant minority ownership
      • Often has board seats
      • Works collaboratively with management on long-term strategy

      Some asset owners are large enough to engage on their own by formally allocating dedicated capital to a relationship-investing strategy. This could involve taking a significant (10% to 25%) stake in a small number of public companies, expecting to hold those for a number of years, and working closely with the board of directors and management to optimize the company’s direction. For smaller asset owners, independent funds like ValueAct Capital and Cevian provide a way to pool their capital in order to influence the strategies of public companies. The partners in such a coalition can jointly interact with management without the fixed costs of developing an in-house team.

      Engaging with companies on their long-term strategy can be highly effective even without acquiring a meaningful stake or adopting a distinct, formal investment strategy. For example, the California Public Employees’ Retirement System (CalPERS) screens its investments to identify companies that have underperformed in terms of total stock returns and fallen short in some aspect of corporate governance. It puts these companies on its Focus List—originally a published list but now an internal document—and tries to work with management and the board to institute changes in strategy or governance. One recent study showed that from 1999 to mid-2020, the companies targeted through the Focus List collectively produced a cumulative excess return of 12% above their respective industry benchmarks after five years. Other studies have shown similar results, with companies doing even better in the first three years after going on the Focus List. Interestingly, the companies CalPERS worked with privately outperformed those named publicly, so from 2020 onward, CalPERS has concentrated on private engagement.

      Despite the evidence that active ownership is most effective when done behind the scenes, there will inevitably be times when public pressure needs to be applied to companies or public votes have to be taken. In such cases, asset owners with sufficient capacity should go well beyond following guidance from short-term-oriented proxy advisory services. Instead they should develop a network with like-minded peers, agree in advance on the people and principles that will guide their efforts, and thereby position themselves to respond to a potentially contentious issue with a company by quickly forming a microcoalition of willing large investors. Canadian Pacific Railway is a recent example where a microcoalition of asset owners worked alongside long-term-oriented hedge funds to successfully redirect management’s strategies.

      Transparency makes such collaborative efforts easier. In the United Kingdom, major institutions are required to “comply or explain” their principles of engagement under the UK’s Stewardship Code. Elsewhere, big asset owners and managers should also publish their voting policies and, when a battle is joined, disclose their intentions prior to casting their votes. Smaller asset owners or those less interested in developing in-house capabilities to monitor and engage with companies can outsource this role to specialists. Hermes Equity Ownership Services, for example, was set up by the BT Pension Scheme in the UK to provide proxy voting and engagement services to 35 global asset owners that together have some $179 billion under management.

      Finally, to truly act as engaged and active owners, asset owners need to participate in the regulation and management of the financial markets as a whole. With some exceptions, they have largely avoided taking part publicly in the debates about capital requirements, financial market reform, and reporting standards. Some of the biggest players in the game are effectively silent on its rules. As long-term investors, asset owners should be more vocal in explaining how markets can be run more effectively in the interests of savers.

      3. Demand long-term metrics from companies to change the investor-management conversation.

      Making long-term investment decisions is difficult without metrics that calibrate, even in a rough way, the long-term performance and health of companies. Focusing on metrics like 10-year economic value added, R&D efficiency, patent pipelines, multiyear return on capital investments, and energy intensity of production is likely to give investors more useful information than basic GAAP accounting in assessing a company’s performance over the long haul. The specific measures will vary by industry sector, but they exist for every company.

      It is critical that companies acknowledge the value of these metrics and share them publicly. Natura, a Brazilian cosmetics company, is pursuing a growth strategy that requires it to scale up its decentralized door-to-door sales force without losing quality. To help investors understand its performance on this key indicator, the company publishes data on sales force turnover, training hours per employee, sales force satisfaction, and salesperson willingness to recommend the role to a friend. Similarly, Puma, a sports lifestyle company, recognizes that its sector faces significant risks in its supply chain, and so it has published a rigorous analysis of its multiple tiers of suppliers to inform investors about its exposure to health and safety issues through subcontractors.

      Asset owners need to lead the way in encouraging the companies they own to shift time and energy away from issuing quarterly guidance. Instead they should focus on communicating the metrics that are truly material to the company’s long-term value creation and most useful for investors. In pursuing this end, they can work with industry coalitions that seek to foster wise investment, such as the Carbon Disclosure Project, the Sustainability Accounting Standards Board, the investor-driven International Integrated Reporting Council, and most broadly, the United Nations–supported Principles for Responsible Investment.

      Practicing Good Governance: NBIM’s policies helped it gain a 34% return on equity investments in 2009.

      But simply providing relevant, comparable data over time is not enough. After all, for several years, data sources including Bloomberg, MSCI, and others have been offering at least some long-term metrics—employee turnover and greenhouse gas intensity of earnings, for example—and uptake has been limited. To translate data into action, portfolio managers must insist that their own analysts get a better grasp on long-term metrics and that their asset managers—both internal and external—integrate them into their investment philosophy and their valuation models.

      4. Structure institutional governance to support a long-term approach.

      Proper corporate governance is the critical enabler. If asset owners and asset managers are to do a better job of investing for the long term, they need to run their organizations in a way that supports and reinforces this. The first step is to be clear that their primary fiduciary duty is to use professional investing skill to deliver strong returns for beneficiaries over the long term—rather than to compete in horse races judged on short-term performance.

      Executing that duty starts with setting high standards for the asset owner’s board itself. The board must be independent and professional, with relevant governance expertise and a demonstrated commitment to a long-term investment philosophy. Board members need to have the competencies and time to be knowledgeable and engaged. Unfortunately, many pension funds—including many U.S. state and local government employee pension plans—are not run this way; they often succumb to short-term political pressure or lack sufficient expertise to make long-term investment decisions in the best interests of beneficiaries.

      However, successful models do exist. For example, the New Zealand Superannuation Fund is overseen by a board of “guardians” whose members are selected for their experience, training, and expertise in the management of financial investments. The board operates at arm’s length from the government and is limited to investing on what it calls “a prudent, commercial basis.” The board is subject to a regular independent review of its performance, and it publishes its progress in responding to the recommendations it receives. Two other exemplary models are the Wellcome Trust, a UK-based global charitable foundation, and Yale University’s endowment fund; each delegates strategic investment implementation to a committee of experienced professionals.

      Professional oversight needs to be complemented by policies and mechanisms that reduce short-term pressures and promote long-term countercyclical performance. These could include automatic rebalancing systems to enforce the selling of equities during unsustainable booms, liquidity requirements to ensure there is cash available to take advantage of times of market distress, and an end to currency hedging to reduce the volatility of short-term performance. Such policies need to be agreed to in advance of market instability, because even the best-governed institutions may feel the heat during such periods.

      A case in point is Norges Bank Investment Management (NBIM), which invests Norway’s revenue from surplus petroleum (more than $814 billion) in the country’s global government pension fund. In 2007 the Ministry of Finance and NBIM set a long-term goal: to raise the equity content of the fund from 40% to 60%. Yet when the financial crisis hit, NBIM lost over 40% of the value of its global equity portfolio, and it faced significant external pressure not to buy back into the falling market. Its strong governance, however, coupled with ample liquidity, allowed it to continue on its long-term path. In 2008 it allocated all $61 billion of inflows, or 15% of the fund’s value, to buying equities, and it made an equity return of 34% in the following year, outperforming the equity market rebound. In similar circumstances a few years later, NBIM kept to its countercyclical strategy and bought into the falling equity market of mid-2020, turning an equity loss of nearly 9% that year into an 18% return in 2020.

      A final imperative for the boards and leadership of asset owners is to recognize the major benefits of scale. Larger pools of capital create more opportunities to invest for the long term by opening up illiquid asset classes, making it cost-effective to invest directly, and making it easier to build in-house engagement and active ownership capabilities. According to analysts such as William Morneau, the Ontario Ministry of Finance’s pension investment adviser, these opportunities are often cost-effective once an asset owner has at least $50 billion in assets under management. That suggests that savers, regulators, and board members of smaller asset owners should be open to these institutions pooling assets or even merging.

      Leading the Way Forward

      Today a strong desire exists in many business circles to move beyond quarterly capitalism. But short-term mind-sets still prevail throughout the investment value chain and dominate decisions in boardrooms.

      Large asset owners can be a powerful force for instituting balanced, long-term capitalism that ultimately benefits everyone.

      We are convinced that the best place to start moving this debate from ideas to action is with the people who provide the essential fuel for capitalism—the world’s major asset owners. Until these organizations radically change their approach, the other key players—asset managers, corporate boards, and company executives—will likely remain trapped in value-destroying short-termism. But by accepting the opportunity and responsibility to be leaders who act in the best interests of individual savers, large asset owners can be a powerful force for instituting the kind of balanced, long-term capitalism that ultimately benefits everyone.

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