Peter Kraneveld, an independent international pensions advisor, said pension investors need to be aware that hedge fund managers’ interests are not aligned with their own and that they should not be afraid to distance themselves from hedge fund activism.

“Pension funds are long-term investors and can therefore make use of corporate governance. Hedge funds have no interest in engagement, however. They only care about profits. They are not interested in dialogue with other investors and are culturally insensitive. Their interests are different to pension funds investors and should not be used within activism.”

He warned than pension funds which support hedge fund activism should tread carefully.

“If you do march with them, then be careful to show that you are independent at every stage.”

Carola van Lamoen, corporate governance specialist at Dutch fund manager Robeco, added that although hedge fund managers are viewed as “dangerous and suspicious”, there were some positive aspects of hedge fund activism.

“They [hedge funds] can, for example, put pressure on under-performing management. However, if there is too much concentration on short term performance, then this can be bad for the company.”

She said strong shareholder presence at AGMs can override hedge fund

influence and pension schemes need to have a greater awareness of the issues. Currently, pension fund investors do not comment at AGMs unless prompted by a consultant or their corporate governance agency.

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