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A different future

'A genuine focus on stewardship would be a positive step'


John KayJohn Kay

During the 19th and 20th centuries, companies needed large public equity markets to raise capital to fund large-scale manufacturing. That’s no longer the case, according to economist John Kay. Investment managers should focus more on being the conduit between investor capital and start-up and growing businesses, instead of trying to outperform standard indices.

“The profession is spending too much time chasing alpha and not enough time enhancing beta and for the economy as a whole the value comes from the latter, not the former,” he says. “Looking forward, I see asset managers having a very large role but not one where I see public equity markets being a central feature.”

Kay believes there’s room for enhancing returns from public equity markets and a genuine focus on stewardship would be a positive step. Often investment portfolios have far too many stocks – the benefits of diversification run out fairly quickly, he says. Instead, Kay recommends concentrated portfolios that can allow investment managers to guide companies to greater returns.

Read more in our report.

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