Retail investor communication has always been a challenge for IR. IROs have traditionally paid greater attention to institutional investors, which are fewer in number and wield considerably more clout. Retail investors are more disparate, and individual relationships yield lower rewards.
The IR Magazine Global Investor Relations Practice Report 2021 shows just over a quarter of shares are held by individuals. But this can include shares held by a company’s individual founding family members – reporting by IR Magazine in 2020 put the number of non-family retail shareholders at just 14 percent. Recent reports have the proportion of the stock market held by individual shareholders ranging between 19 percent and 26 percent.
On the other hand, institutional investor ownership is consistent. In the last two years, reports by IR Magazine show six in 10 shares globally are held by investment institutions. Among North American companies, this rises to 69 percent.
This inevitably leads to IROs focusing on their relationship with the institutional investment community. While institutional engagement is conducted through meetings, events and the cultivation of interpersonal relationships, retail investor engagement largely relies on wider communication media. Websites in particular are a key means for IR to address the retail community and get the company story out.
IR Magazine‘s latest report on IR Websites, shows that 62 percent of IR professionals find IR web pages to be an effective tool in communicating with retail investors, compared with 13 percent who find them ineffective.
General reasons given for their effectiveness in retail communication focus on the ease of reporting on a website, with the ability to provide large amounts of information in a clear and concise way.
Access all areas
German multinational chemical company BASF, winner of the best IR website trophy at this year’s IR Magazine Awards – Europe, has more than 800,000 individual shareholders. Dr Stefanie Wettberg, senior vice president of IR at BASF, explains that ‘around 40 percent of our share capital is held by private investors. The best way to inform this large group is via our IR website. It is the easiest and fastest way to make all relevant information broadly accessible.’
Having such a large retail investor base highlights the need for readily accessible information on IR web pages. ‘We offer comprehensive information and a wide range of services, from Excel downloads, online reports and factbooks to newsletters via email and much more,’ Wettberg says. ‘We also include links to other sections of basf.com with further information – for example, on our sustainability activities. This topic is of particular interest to our retail investors.’
This is an extract of an article that was published in the Fall 2022 issue of IR Magazine. Click here to read the full article.
