The investment profession provides new capital through primary markets. This new capital may take the form of debt or equity and may be issued publicly or privately. In addition, investment professionals participate in the secondary market as buyers or sellers of existing securities and, in doing so, set the prices for those securities.
Once capital has been provided, investment professionals act as its stewards on behalf of their clients to ensure efficient allocation to those locations where it can properly and most productively be applied. In primary markets, borrowers (companies and countries) compete to attract capital based on investors’ perceptions of the balance of future risk and reward.
Investment professionals believe that they provide an important role in capital allocation by assessing the appropriate cost at which to provide capital by undertaking in-depth financial analysis. Their analysis incorporates the company or sovereign credit’s financial information, its operating environment and its governance. Stakeholders also note that investment professionals’ reliance on accurate, relevant, consistent data has led them to contribute to the improvement in the quality of the data provided to the market over time.
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'A genuine focus on stewardship would be a positive step'
'Regulators and government need to think more holistically about the motivation for regulation'
'Stakeholders report that the investment profession plays an important economic role through its contribution to the...
'Primary markets provide companies of sufficient size with access to larger pools of capital and, through secondary...
'Where stewardship is effective, you would expect the board and shareholders to be in broad agreement about the...