Passive Investment

The rise of index investing has created a strange problem for investor relations. Some of the largest shareholders on a company’s register may be investors that IR cannot persuade to buy another share. You can improve disclosure, sharpen the equity story, hold a brilliant capital markets day and convince the market that the company is materially undervalued. An active fund manager can respond by increasing their position. An index tracker generally cannot. Its mandate, rather than its conviction, largely determines how much it owns. And yet that same shareholder may have a meaningful say on remuneration, board appointments, capital allocation,…