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.