wef_future_of_long_term_investing-baf1c16c9f997cc5.pdf

The report defines long-term investing as holding assets for an indefinite period (typically 10+ years) and identifies institutional asset owners—such as sovereign wealth funds, pension funds, and endowments—as the primary providers of this capital. It argues that while long-term investing can stabilize markets and fund critical infrastructure and clean energy, its capacity is constrained by liability profiles, risk appetite, and decision-making structures. In the wake of the 2008 financial crisis, many investors have de-risked due to regulatory pressures like mark-to-market accounting and demographic shifts. The report recommends that policy-makers mitigate the unintended effects of strict solvency regimes and that investors align compensation and performance metrics with long-term mandates.

• Long-term investing is defined as investing with the intent to hold an asset for an indefinite period, typically at least 10 years or a full business cycle, by an investor capable of doing so.
• In 2009, long-term institutional asset owners controlled approximately US$ 27 trillion of the world's US$ 65 trillion in professionally managed assets, but constraints limited the actual capital available for long-term strategies to roughly US$ 6.5 trillion.
• The primary constraints preventing institutions from investing long-term include their liability profiles (short-term obligations), investment beliefs regarding superior returns, risk appetite for volatility, and decision-making structures.
• Long-term investing provides specific benefits: investors can access risk premia (market, liquidity, and complexity), corporations can pursue long-term strategic initiatives without short-term market pressure, and society benefits from countercyclical market stabilization.
• The 2008 financial crisis revealed that many long-term investors underestimated their short-term liabilities and found that asset classes they believed were diversified were actually highly correlated during the crash.
• There is a diverging trend in risk appetite post-crisis: some public pension funds are 're-risking' to cover underfunded liabilities, while corporate pension funds and life insurers are 'de-risking' due to regulatory and accounting pressures.
• Regulatory shifts toward mark-to-market accounting and stricter solvency requirements, such as the proposed Solvency II in Europe, are pushing long-term investors toward liquid, low-risk assets and away from equities.
• To combat 'short-termism' and principal-agent conflicts, the report suggests implementing compensation systems with clawbacks and parallel portfolios to align manager incentives with long-term fund goals.
• Long-term investors are increasingly adopting simplified asset allocation frameworks based on risk factors (equity, liquidity, term, credit), macroeconomic scenarios, or secular themes rather than granular asset-class buckets.
• The report identifies a growing need for long-term capital in infrastructure (estimated up to US$ 3 trillion per annum) and clean energy (estimated US$ 500 billion annually by 2020 to reduce CO2 emissions).

APA

von Bismarck, M., Gontownik, A., Hill, A., Hobart, J., Lerner, J., & Mendelssohn, I. (2011). wef_future_of_long_term_investing-baf1c16c9f997cc5.pdf. World Economic Forum. http://www3.weforum.org/docs/WEF_Future_of_Long_term_Investing.pdf

Chicago

von Bismarck, Max, Ari Gontownik, Andrea Hill, Julia Hobart, Josh Lerner, and Irwin Mendelssohn. wef_future_of_long_term_investing-baf1c16c9f997cc5.pdf. World Economic Forum, 2011. http://www3.weforum.org/docs/WEF_Future_of_Long_term_Investing.pdf.

Wikipedia

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BibTeX

@techreport{vonbismarck2011weffutureoflongterminvestingbaf1c16c9f997cc5pdf, author = {von Bismarck, Max and Gontownik, Ari and Hill, Andrea and Hobart, Julia and Lerner, Josh and Mendelssohn, Irwin}, title = {{wef\_future\_of\_long\_term\_investing-baf1c16c9f997cc5.pdf}}, institution = {World Economic Forum}, year = {2011}, url = {http://www3.weforum.org/docs/WEF_Future_of_Long_term_Investing.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }