Influence of the growing ETF industry on active investor relations work 65Summary and outlook lesser extent Consequently an individual approach that is adapted to the respective company is nec essary IR must therefore decide for itself which measures it considers sensible and feasible As a first step it would be useful to analyze what percentage of the company is held passively and in which indices and ETFs the company is repre sented Depending on the outcome of these anal ysis setting up an active index targeting strategy and trying to achieve and meet certain index crite ria are possibilities Furthermore the likelihood of getting on the radar screen of theme ETF providers can be increased by a selected formulation of the equity story Moreover trying to contact experts who do not only offer passive ETFs but also use active approaches could be another starting point Nevertheless the topics of ESG and maintenance of company data in databases should always be part of the strategy How severe will this impact be How strong the influence on the respective IR department will be depends on the company s structure Overall it can be said that large cap companies are more likely to perceive the change since they automatically are more frequent part of indices especially of large and liquid ones So called mega caps in particular are often repre sented in indices and thus attract a lot of passive money The larger the company the more import ant passive investment will become The situation is different for small cap companies where the number of active investors will remain the abso lute majority It is more difficult for small and even mid cap companies to get into liquid indices and to be recognized by ETF providers Although the intensity of the influence will depend on the size of the company and consequently also on the index membership e g if a company is listed in the DAX or SDAX it will not depend on the sector but will affect the entire economy This impact should not only be perceived as a threat but rather seen as an opportunity for IR with passive investments investments could become more objective because only numbers and KPIs count Liar s tales or subjective percep tions no longer play a role here Will IR become superfluous Even though IR will be affected by the passive investment industry it will not become superflu ous The trend towards more passive automated processes without human contact being necessary e g for investment decisions as automated algo rithm interpret numbers which are summarized by AI will further increase Despite this increasing automation and standardization and the use of AI in many areas personal human contact will still be relevant in some places and cannot be replaced by a machine For example the service of getting the strategy and business model explained by a human instead of looking for all the information on the website will still be demanded In addi tion to the personal contact aspect it must also be taken into account that IR is responsible for such a wide range of tasks see chapter 3 3 where as described earlier not every area is equally affected by the trend towards more passive investments or standardization For example new regulations will continue to appear all the time and it will con tinue to be IR s responsibility to keep up to date in this regard Fulfilling its advisory role to the CFO and the board of directors will also continue to be needed

Vorschau DIRK-Forschungsreihe Band 28: Influence of the growing ETF industry on active investor relations work Seite 65
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