What are the features of long-term investors ?
Long Term Investors are characterized by a low reliance on short term market liquidity thanks to stable resources, often made of regulated or guaranteed deposits, long term savings products (insurers, pension funds) or long term borrowing. They usually have a robust capital base, stemming mainly from reserve accumulation, that enables them to absorb short-term fluctuations in financial markets (drawing on reserves in bad years and feeding them in good years).
As such :
they have the ability to retain their assets longer than other market players, even in crisis periods, which can play a counter-cyclical role on financial markets ;
they can invest in - often illiquid - capital or debt instruments that yield a profitable return in the long run such as those issued by companies operating in sectors like general interest utilities, infrastructures, innovation projects, renewable energies and the like ;
their liabilities differ in quality from the ones of other financial investors ;
their investments are typically carried out with performance and risk targets calculated on a long term basis.
Long Term Investors comprise major financial institutions financing economic development, sovereign wealth funds, pension funds, public retirement funds, insurance funds.