Investing in people benefits all
Investing in human capital as an effective strategy for delivering outperformance might raise a few questions and eyebrows, but at Axa WF Human Capital, fund managers believe it will work.
The fund's innovative responsible investment strategy is based on investing in companies with good human capital management, which Axa Investment Managers maintains leads to good productivity and profitability. "Good human capital management, which means things like job creating, training and reward systems, creates competitive advantages for companies and investors," says Jean-Marc Maringe, fund manager, speaking from 10 years of experience in running a mandate on human capital.
"In increasingly competitive and global world markets, where pricing power for firms no longer guarantees success, productivity factors are becoming key competitive advantages," says Mr Maringe.
Brett Walsh, lead consulting partner for human capital in Europe, the Middle East and Africa at Deloitte, supports his view and sees human capital as an investment area "likely to outperform". "It is an intelligent asset class in which to invest, as it is one that appears to be robust," says Mr Walsh.
In the Sunday Times's recent Best Companies to Work For competition, the share performance of the 31 best listed companies outstripped those in the FTSE 100 index. Over the past five years the survey showed they performed twice as well as the FTSE 100, showing a strong correlation between investing in human resources and increasing shareholder value.
Mr Walsh is not surprised by the correlation but says he is surprised by how few companies recognise it and miss out on a good financial strategy. Attracting, training and retaining good talent in the workplace is of particular importance for the future. "The workforce in Europe is shrinking and will drop 13 per cent over the next 40 years, so there will be a smaller talent pool to draw from," he says.
Raj Thamotheram, director of responsible investment at Axa Investment Managers, says: "It is a different way of looking at human capital, not regarding it as just a cost but looking at the correlation between human capital performance and good returns.
Investing in human capital as an effective strategy for delivering outperformance might raise a few questions and eyebrows, but at Axa WF Human Capital, fund managers believe it will work.
The fund's innovative responsible investment strategy is based on investing in companies with good human capital management, which Axa Investment Managers maintains leads to good productivity and profitability. "Good human capital management, which means things like job creating, training and reward systems, creates competitive advantages for companies and investors," says Jean-Marc Maringe, fund manager, speaking from 10 years of experience in running a mandate on human capital.
"In increasingly competitive and global world markets, where pricing power for firms no longer guarantees success, productivity factors are becoming key competitive advantages," says Mr Maringe.
Brett Walsh, lead consulting partner for human capital in Europe, the Middle East and Africa at Deloitte, supports his view and sees human capital as an investment area "likely to outperform". "It is an intelligent asset class in which to invest, as it is one that appears to be robust," says Mr Walsh.
In the Sunday Times's recent Best Companies to Work For competition, the share performance of the 31 best listed companies outstripped those in the FTSE 100 index. Over the past five years the survey showed they performed twice as well as the FTSE 100, showing a strong correlation between investing in human resources and increasing shareholder value.
Mr Walsh is not surprised by the correlation but says he is surprised by how few companies recognise it and miss out on a good financial strategy. Attracting, training and retaining good talent in the workplace is of particular importance for the future. "The workforce in Europe is shrinking and will drop 13 per cent over the next 40 years, so there will be a smaller talent pool to draw from," he says.
Raj Thamotheram, director of responsible investment at Axa Investment Managers, says: "It is a different way of looking at human capital, not regarding it as just a cost but looking at the correlation between human capital performance and good returns.