Cbus has a system, known as a “circular resolution”, by which if it is determined that an opportunity exists that falls outside the strategy, the investment team can seek approval of the board without a formal meeting. “It is a situation that has occurred two or three times in the last six months,” Atkin says. “On one occasion, an opportunity was discussed, but the cut-off date for commitments fell between meetings. The due diligence was not complete; we were waiting on one last piece of information. As soon as that information was received the investment committee was able to get written approval from each of the board members and proceed.”

According to a recent article by asset consultants Watson Wyatt, funds are increasingly using a more dynamic approach to investment strategy and implementation. Many are prepared to move away from the historical practice of making investment decisions around dates in the diary set by board availability and opting instead for investment processes that have been delegated to either internal or external experts that can be implemented, as and when opportunities arise.

Asset consultant at Watson Wyatt, Andrew Grimes, says that funds with good governance have been able to move from being “calendar time” investors to “real time” investors. Being a long-term investor does not necessarily mean acting slowly, he says. “Long term, strategic opportunities can present themselves with a very short window of time to identify, evaluate and exploit.” At the $2.9 billion industry fund Westscheme, the seven-member board sets strict policy specifying the desired excess return and tracking error in any asset class, before delegating the implementation to its executives and the asset consultant, Access Capital Advisors. “Every time we look at a new area, the board distils principles that will guide the investing,” says Howard Rosario, chief executive officer at Westscheme.

Each decision must be ratified by the board, which meets once a month, but often this occurs after the commitment has already been made and the board can ratify decisions without waiting until the next meeting. Rosario says that if opportunities arise outside the policy with short commitment deadlines, they can be dealt with on a case by case basis, and a set of guidelines could be reached in as little as four weeks time. “But as a fund we do a lot of research,” he says. “Setting policy takes as long as the board of directors want it to take.”

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