Dangers of intervention

Growing trend of large fund managers intervening in companies' affairs is bad news for small investors

Large institutional investors are increasingly intervening in the affairs of companies in which they invest. But unfortunately the effects of such corporate governance intervention run counter to the interests of retail customers. The largest players are big pension funds such as CalPERS in the US and Hermes in the UK, and leading insurance companies. A common characteristic is that they have very large holdings of particular shares which, by dint of their size, are relatively illiquid. Active trading is therefore not regarded as feasible. Considering themselves to be locked into these hol...