Recent IR Impact briefing, held alongside Nasdaq, explores the implications of the ongoing passive shift
As passive ownership continues to grow, how companies interpret trading activity and allocate their investor engagement efforts is shifting in parallel. A recent IR Impact briefing, in association with Nasdaq, brought together Jacquelynn Bohlen (head of IR, Columbia Banking System), Stephanie Bui (co-head, investor engagement, Americas, Nasdaq) and Prabhdeep Sagoo (senior director, market and shareholder intelligence services, Nasdaq) to examine how these structural changes are reshaping expectations of the IR role.
Their discussion explored the growing focus on improving engagement strategies, the need for IR teams to be methodical in targeting active investors and how to integrate benchmarking as a tool to demonstrate the strategic value of IR.
Passive as active supporters
The discussion started off about the changing trends in passive flows. Sagoo described passive flows as ‘one of the largest supporters of public equity markets at the moment’. He noted that large cap equities continue to attract most inflows, while ‘smaller caps have underperformed and haven’t seen robust flows.’ He added that these dynamics are shaped by index rules and ‘systematic positioning’ rather than discretionary investment views.
Bui, whose background is in investor targeting, moved the discussion onto what passive investors prioritize in their engagement, noting that stewardship and governance contacts are increasingly central to interactions with issuers.
She added that, from the issuer perspective, passive investors ‘rely heavily on governance and ESG disclosures’ in their off-season and that a large majority of their time is spent on engaging active investors.
Bohlen echoed the theme, noting that passive investors’ influence is significant in trading, but their preference for direct engagement focuses on governance expectations.
Seizing the opportunity
Sagoo observed that there is a ‘significant’ outflow of assets from mutual funds into passive money. Bui also explained that index constituents receive capital from active managers as well as passive funds, who benchmark against these indices. As companies move between index families, such as from small cap to large cap ‘you can expect new active opportunities because of the number of active funds benchmarked to that index,’ she said.
Bringing her issuer perspective, Bohlen revealed details of how these flows appear inside her company’s ownership, adding that this has fluctuated ‘between 35 to 40 percent passive ownership’ and that index changes linked to corporate activity ‘bring a lot of volatility to the shares.’
That shift has significant implications for IR – both as an opportunity and a risk. For Bui, IR teams must be more disciplined in their outreach and be ‘more methodical around who they meet with and why’ given that the concentration of active investors is narrowing. Sagoo added that these moments call for fast, clear communication of market movements internally, so that shareholders can stay informed.
Bohlen described how she adopts a plan to navigate these moments by ‘favoring short but frequent communication’ and asking critical questions like ‘why it’s volatile, how it impacts us and how we compare to peers.’ She added that the clarity of communication and speed of response are of utmost importance, adding: ‘If the entire street is off from what you think your forecast is, then your message isn’t clear.’
Fund flows as benchmarking tools
While communication is a focal point, Sagoo added that another key element to the ongoing passive shift is the role of benchmarking. He encouraged teams to diligently track shareholder changes over time, recording meeting patterns using these data points ‘as a benchmark for the following year’ to inform future strategic planning.
Bohlen also framed benchmarking as a practical tool for interpretation rather than a ‘scorecard.’ During periods of volatility, she emphasized that contextualizing share price movements is important. As an example, ‘your stock could be down 5 percent in a day, and that’s causing panic internally, but if your peer group is down 7 percent… that’s the leading bullet point that you want to begin with’. All three panelists agreed that tracking how consensus changes is a good way for IR teams to assess whether their message is truly helpful.
Collectively, the panel underscored that relevance is pivotal: clear communication is rooted in targeted engagement and a clear approach to measuring and emphasizing effectiveness is central.
Access the full IR Impact briefing here.
