The Hermes UK Focus Fund saw abnormal returns and outperformed expected measures; results associated with engagement and activism rather than stock picking. The UK is an ‘ideal institutional setting for shareholder activism because it provides more legal resources than the US to asset owners.

The fund, when presented with mediocre corporate performance, engaged in intervention in the way of changes to the board, corporate restructuring, changes in financial policy and more. While these changes resulted in successful outcomes for the shareholder, they rarely required a resolution at shareholder meetings.

“In sum, this study provides the first substantive evidence of gains to shareholder activism and suggests that well focused engagements can result in substantial public returns to outside shareholders as well as to those actually involved in the engagements.”

Returns to Shareholder Activism: Evidence from a Clinical Study of the Hermes U.K. Focus Fund, Becht, Marco. (Working Paper, London Business School, 2006)