The future of fiduciary obligation for institutional investors

doi:10.1017/CBO9781139565516.016

13 - The future of fiduciary obligation for institutional investors

Published online by Cambridge University Press: 05 April 2014

Claire Molinari

Edited by

James P. Hawley ,

Andreas G. F. Hoepner ,

Keith L. Johnson ,

Joakim Sandberg and

Edward J. Waitzer

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Claire Molinari: Affiliation:
University of Oxford
James P. Hawley: Affiliation:
St Mary's College, California
Andreas G. F. Hoepner: Affiliation:
ICMA Centre, Henley Business School, University of Reading
Keith L. Johnson: Affiliation:
University of Wisconsin, Madison
Joakim Sandberg: Affiliation:
University of Gothenburg
Edward J. Waitzer: Affiliation:
York University, Toronto

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Summary

Introduction

The context of this chapter is one of change. The world of institutional investment has been undergoing some fundamental structural shifts for a number of years, and many of these have direct implications for the future of fiduciary obligation.

The defined benefit pension fund, once the mainstay of institutional investment funds, is quickly being replaced by the defined contribution scheme. This transfers the risk of poor investment performance from corporate and state employers to individual beneficiaries. At the same time, pension fund trustees, the traditional bearers of fiduciary obligation, are now rarely the key players in investment decision-making. Virtually all asset owners have delegated day-to-day investment decision-making to asset managers and strategic planning to investment consultants, and whether these agents are bound by fiduciary obligation is often unclear. Finally, trust-based pension funds are increasingly giving way to contract-based schemes operated by large insurance companies. These are governed by the law of contracts, under which fiduciary obligation does not exist.

Type: Chapter
Information: Cambridge Handbook of Institutional Investment and Fiduciary Duty , pp. 159 - 168

DOI: https://doi.org/10.1017/CBO9781139565516.016 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2014

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