The $237 billion Future Fund has added activist hedge fund Effissimo Capital Management to its roster of active equity managers, joining firms like Maple-Brown Abbott and Wellington Investment Management. Effissimo, based in Singapore, has remained a low-profile player in the world of activist investing, despite its significant role in several landmark corporate governance battles in Japan.
Founded in 2006 by former employees of Yoshiaki Murakami, a key figure in pioneering activist investing in Japan, Effissimo has kept a discreet presence in the investment world. Murakami’s “Murakami Fund” was pivotal in bringing shareholder activism to the country, but Murakami himself faced a two-year suspended sentence for insider trading in 2006. Effissimo, however, has garnered backing from major institutional investors, including the Canada Pension Plan Investment Board and various university endowments, according to reports.
Effissimo’s most notable recent involvement was in 2021, when it held a nearly 10% stake in Toshiba and pushed for an investigation into allegations that the company had attempted to coerce investors, including the Harvard University Endowment, into supporting management-backed resolutions. The investigation, which garnered majority shareholder support (a rare occurrence in Japan, where management often holds sway), led to the ousting of Toshiba’s chairman.
In addition to Toshiba, Effissimo has expanded its activism. Following the acquisition of Toshiba by a consortium led by Japan Industrial Partners, Effissimo took a 2.5% stake in Nissan in November, capitalizing on the company’s declining share price. The hedge fund has long advocated for Nissan to acquire its subsidiary, Nissan Shatai, where Effissimo is a significant shareholder with a 30% stake.
The Future Fund has not commented on its new partnership with Effissimo, but this move aligns with the fund’s strategic shift toward active management in areas where managers can demonstrate skill rather than relying on market momentum. This shift follows the Future Fund’s decision to reduce its reliance on passive equity strategies after its overhaul of active equity managers in 2017.
In recent years, the Future Fund has expressed concerns about the limits of equity returns driven solely by market and macroeconomic factors, especially amid ongoing geopolitical uncertainty. As a result, the fund has turned to alpha-seeking strategies within its $65 billion listed equities program.
“We believe the market conditions have changed,” said Future Fund CEO Raphael Arndt in 2023. “Economies are diverging, and companies are now better positioned to distinguish themselves in a more challenging environment. As such, active strategies that seek alpha have become increasingly attractive.”
The Future Fund has already established a notable presence in Japan, with an active allocation managed by Wellington Investment Management. The fund has been overweight on Japan, citing factors such as strong corporate balance sheets, attractive asset values, and improving governance practices as key reasons for its investment outlook.
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