The dramatic shifts in the investment landscape—from individual to institutional shareholders and from actively managed funds to indices—have put pressure on boards to strengthen governance and oversight practices. On July 19, Lead Director Network (LDN) members met in New York to discuss their firms’ relationship with institutional investors. The meeting included a session with Michelle Edkins, global head of the investment stewardship team at BlackRock, followed by a separate, executive-session discussion about related issues over a working dinner. This ViewPoints synthesizes those conversations, which focused on BlackRock’s place in the institutional-investor landscape and its approach to creating long-term value through its investment stewardship activities. A companion ViewPoints synthesizes another discussion held at the meeting related to oversight of workplace conduct in the context of the #metoo movement.

The institutional-investor landscape

Institutional investors have become increasingly prominent in capital markets over the last few decades. Institutional investors—which include mutual funds, asset managers, pension funds, insurance companies, and others—pool assets and deploy them with the aim of achieving high financial returns. In 1950, institutional investors held 7%–8% of all US equities. As of last year, institutions owned 78% of the market value of Russell 3000 companies. Many of these institutions have become more active, engaging directly with their portfolio companies. Additionally, in the United States, institutions are three times more likely to vote their shares than are individual investors.