Institutional and Other Investment

Institutional investors are key actors in combating climate change. They are exposed to the risks and opportunities of climate change, and represent a large pool of capital that could help finance the trillions of dollars required to transition to a low carbon economy. Recognition of these issues within investment institutions appears to be increasing, but understanding climate change, and its associated investment implications, remains far from universal among investment professionals.

This discussion paper outlines the current understanding of climate change in the investment markets in the UK and Australia, providing novel insights from 58 semi-structured interviews with a range of investment professions and a survey of 154 investors. The UK and Australia both have substantial and growing institutional investment systems, as well as increasing activism surrounding Responsible Investment (EY, 2015). Given this, more responsible management of these assets could, potentially, provide significant impetus in shifting capital towards lower carbon economies.

The level of understanding of climate change, and how it relates to the investment system, was shown to vary hugely among participants in this research. The majority of participants focus more on climate risks than on the investment opportunities likely to arise from environmental change, although this divide was more noticeable in Australia than in the UK, partly due to the greater focus on regulatory risk in Australia. Another reason for this focus was the greater availability of investment products catering to climate risks, such as fossil-free indices and negative screening, compared to products that might be able to capture investment opportunities.

Historically, public and affordable housing has been provided by the state in close conjunction with local authorities, public housing developers, and other social housing providers. Yet, affordable rental homes are now increasingly being managed, produced, or acquired by private equity firms and other institutional investors. In this contribution, we argue that 'financialised privatisation' is a helpful concept for understanding these shifts in state-finance compromises within the post-crisis affordable housing sector. Drawing on the case of England, we first discuss the major mechanisms of financialised privatisation and examine how an increasingly polymorphous affordable housing sector has emerged with a focus on multi-tenure and mixed-income housing tenures. We then discuss the possible challenges of this transformation and conclude that it remains very much a question whether a privately funded housing system will emerge that provides genuinely affordable housing and reduces inequalities.

This study examines the dynamics of the relationship between institutional investment flow and stock returns for India using daily data over the period of The analysis has been conducted in a two and three factors vector autoregression framework in which we considered investment flow of two sets of institutional investors i.e., foreign institutional investors (FIIs) and domestic institutional investors (DIIs), separately as well as jointly to form the endogenous part of vector autoregression system. The separate analysis for each institutional investors group reveals that, FIIs flow do not have any significant impact on market returns, the DIIs investment flow do. We also find that the fund flow from both the investor groups significantly affected by their own lags and lagged returns, implying that they follow their own past strategy as well as the recent market behaviour albeit their trading strategy differs. Considering these two institutional investment groups jointly, we find that the net flow of both FIIs and DIIs significantly influences Indian stock market even after controlling for market fundamentals. Further we find a feedback relationship between the institutional investment flow and stock market returns. Overall, it is found that the institutional investment flow collectively impact the stock market returns.

This paper examines institutional investors' propensity to invest in a relatively unknown asset class of listed private equity. Based on data provided by LPEQ, Preqin and Scorpio Partnership covering 171 institutional investors in Europe in 2008-2010, we find allocations are primarily a function of size, type, location, decision-making authority and liquidity preferences. Investment in listed private equity is more commonly made by institutions that are smaller, private (not public) pension institutions, institutions that have a preference for liquidity, quick access, and administrative and cash flow management simplicity, and institutions that are based in the UK, Switzerland, Sweden and the Netherlands. As well, institutions are less likely to invest in listed private equity when investment decision-making is empowered to an alternative asset class team.

This paper examines institutional investors' propensity to invest in a relatively unknown asset class of listed private equity. Based on data provided by LPEQ and Preqin covering 100 institutional investors in Europe in 2008, we find allocations are primarily a function of size, type, location, decisionmaking authority and liquidity preferences. Investment in listed private equity is more commonly made by institutions that are smaller, private (not public) pension institutions, institutions that have a preference for liquidity, and institutions that are based in the UK. As well, institutions are more likely to invest in listed private equity when investment decision-making is not empowered to a private equity team, an alternative asset class team, or a board / investment committee, but are more likely when decision-making is delegated to an equities team.

In this study we analyze the effects of reverse stock splits on institutional holdings and share price using data from 1980 through 2010. Our study sheds further light on underlying causes of reverse stock splits by analyzing reasons that are either reported in the news article or stated explicitly by firm managers or board of directors. We also provide evidence on a mechanism (i.e., avoidance of low price stocks) through which the prudent-person rule affects institutional investment and how reverse stock splits could change institutional investment through such mechanism. Finally, we provide evidence in support of theory of incomplete markets by establishing a link between changes in institutional investment and changes in share price.

Socially responsible investment (SRI) aims to affect social change whilst delivering financial benefits to investors. This article explores the extent to which trust law facilitates SRI. An analysis of trustee duties will demonstrate that, though in practice SRI is possible, the opportunities to lawfully employ such policies are limited. This insufficient facilitation conflicts with equity’s morally normative conscience which, it is argued, should necessitate SRI’s availability. This conflict is reconciled through an analysis of equity’s wider functions. Following an exploration of attempts at SRI facilitation within charity law, this article concludes by proposing an amendment to the Trustee Act 2000.

This paper examines institutional investors' propensity to invest in a relatively unknown asset class of listed private equity. Based on data provided by LPEQ, Preqin and Scorpio Partnership covering 171 institutional investors in Europe in 2008-2010, we find allocations are primarily a function of size, type, location, decision-making authority and liquidity preferences. Investment in listed private equity is more commonly made by institutions that are smaller, private (not public) pension institutions, institutions that have a preference for liquidity, quick access, and administrative and cash flow management simplicity, and institutions that are based in the UK, Switzerland, Sweden and the Netherlands. As well, institutions are less likely to invest in listed private equity when investment decision-making is empowered to an alternative asset class team.