Asset Owners, Investment Management, and Commitment : An Organizational Framework

This paper focuses upon asset owners, such as pension funds, and their models of investment management, recognizing the choice between insourcing, outsourcing and re-intermediation. Drawing upon the principal-agent problem, the dimensions of the management ‘problem' are identified emphasizing the challenges facing asset owners when attempting to realize value from asset managers. Implications are drawn for the management practices of asset owners and the implementation of investment strategy combining in-house capabilities with external relationships. Here, a set of metrics of performance are identified that is consistent with superior long-term investment performance relevant to a range of asset owners large and small