23 October 2018

The EFFIO Group autumn meeting advances investment peer-learning and topical exchanges on current issues

The European Foundation Financial and Investment Officer Group (EFFIO) met in Hilversum, the Netherlands, on the 4th-5th of October to delve into a variety of issues and topical debates.

Hosted by Instituut Gak, the two-day event provided EFFIO members with the opportunity to engage with peers and external experts in timely discussions, take stock and gain new insights on current investment trends, and overall further the overarching EFFIO mission of advancing knowledge on the investment environment and practice of foundations across Europe.

The programme kicked off with a presentation of the annual EFFIO members survey, triggering discussions on investment objectives, changes in asset allocation and currency hedging, as well as performance figures and portfolio management among its 28 members. In the course of it 16-year history, EFFIO members have successfully created a safe and trusted space that enables such confidential and meaningful exchanges to materialise.

What is the overarching philosophy in searching for the best investment managers ? What investment skills to look for and what selection criteria need to inform the process ? When the relationship needs to be terminated, and is this different from other relationships ? These were some of the key questions raised in the context of a closed exchange on best practice in manager selection. In the context of this session, bfinance, a global investment consultancy, shared insights with EFFIO insights from their business model.

While divesting from carbon/fossil is a mainstream topic today, EFFIO members had a more integrated discussion on a pertinent question: how to deal with investments that currently do well, but can be morally questionable and potentially riskier than foreseen? Marian Hogeslag, Partner at DoubleDividend, led participants into a discussion on various approaches on ESG strategies to sustainable investing such as exclusion, best in class, and full integration of sustainability in investment process. A central part of the discussion zeroed in on how foundations can leverage their power as institutional investors to contribute positively to the environments and communities where they operate, while the discussion also touched on how the SDGs framework can be integrated into investment processes to generate impact.

A more theoretical discussion looked at how 10 years after banking almost crashed the global financial system, there is a general consensus that the current system is still broken. However, can the status quo be fixed and what are the alternatives ? “The value of the real assets of a company has to be greater or equal to the value of the company’s liabilities in the worst financial state.” With this simple, yet powerful thesis, Jonathan McMillan, co-author of the book the End of Banking, kicked off an exchange with EFFIO members on how the golden era of decentralisation and digital solutions can help mitigate financial systemic risk, and debated what a blueprint for a modern financial system could look like.

Lastly, in the context of the session on “Investing in China,” Daniel Gros, Director of Economy and Finance, at the Brussels-based think tank CEPS, deep dived into the three trends shaping the environment at macro level: high investment, growing importance of the financial sector and gradual opening. The presentation set the stage for broader discussions on investing in the one-party state, the significant regional inequalities and the “many Chinas” existing within the country, as well as the implications of the extraordinary upgrading of human capital. Questions were raised over the country’s long-term growth prospects and what are the key indicators investors should be paying attention to.