Gore warns against super short-termism
Former US Vice-President Al Gore has urged Australian superannuation fund trustees to avoid short-termism when assessing investment strategies.
Gore, who is now chairman of US-based firm Generation Investment Management, used his opening address to the annual Association of Superannuation Funds of Australia conference in Melbourne to warn about the implications of adopting short-term investment strategies.
He said that 30 years ago the average period a pension fund held on to particular equities was seven years while today, some funds were turning over their investment portfolios in as little as 11 months.
"If you put money in and pull it out again in the space of a few months you are not investing, you are speculating," Gore said. "And just because everyone is doing it, doesn't make it right."
He said that one of the factors driving this short-term approach was the quarterly reports being demanded of investment managers - something which prompted them to take short-term options.
"Rapid information flow has been one of the drivers of this phenomenon and it has cast a spell over the marketplace," Gore said.
He said "it was time for fiduciaries such as superannuation trustees to take a long-term view and be guided by the lights of the stars rather than those of passing ships".
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