Partners Guillaume Buell and Domenico “Nico” Minerva are the authors of the informative article “Investing in Commingled Funds: Potential Negative Implications for Pension Funds” published in the Fall 2025 edition of NCPERS PERSist, which explores the drawbacks of investing in Commingled Funds for institutional investors.
While some pension funds have been drawn to Commingled Funds for lower-cost exposure to the stock market, the authors highlight the notable drawbacks of this investment strategy. Specifically, they note that when a pension fund invests in a Commingled Fund, it loses the right to direct where investments go and the legal rights associated with direct ownership of stock, such as voting in corporate elections, initiating corporate governance actions, and recovering losses and securing reforms through securities litigation. These legal rights have historically been “useful tools for pension funds and other institutional investors to wield when advocating for corporate change.”
A significant right that comes from direct ownership is the ability to participate in corporate elections, which allows funds to select nominees to a board of directors, approve mergers or acquisitions, and influence significant policy changes in a corporation’s structure and governance. Guillame and Nico emphasize that this form of direct participation “allows a pension fund to vote for positive change in a corporation while simultaneously bolstering its own interests” and “aligns with American tradition and institutional investors’ historical role as advocates for proper corporate governance policies.”
The ability to initiate corporate governance actions is another important tool of direct ownership. These actions can be used to address important issues such as labor practices, workplace safety, and employee rights. The authors point to proxy contests as well as private engagement, noting California Public Employees’ Retirement System’s 2020 reporting that its private engagement led to 20 corporations agreeing to change their voting standards, as key examples where initiating corporate governance actions has driven substantial change.
Noting securities litigation as a powerful shareholder tool to recover losses when corporate insiders violate the securities laws, Guillaume and Nico emphasize that “when a pension fund acts as lead plaintiff, they not only benefit themselves, but other class members as well.” Statistically, in recent securities class actions led by institutional investors, “the median settlement was over five times larger than without an institutional investor lead plaintiff,” and “where institutional investors and pension funds served as lead plaintiff, the median settlement recovered 18.6% more of the damages in the case.” For example, they note, the union pension fund that served as the lead plaintiff in the stockholder litigation against Dell Technologies secured a record-breaking $1 billion cash settlement for the class, representing the largest recovery prior to judgment ever achieved in a fiduciary duty action in the Delaware Court of Chancery and the largest shareholder settlement in any U.S. state court at the time.
Beyond monetary recoveries, the authors highlight the power to achieve corporate governance reforms through securities litigation. Guillaume and Nico point to actions involving Massey Energy and Guess?, Inc. as key examples. In Massey Energy Securities Litigation, the Massachusetts Pension Reserves Investment Trust, serving as lead plaintiff, held the company accountable to the tune of $265 million in connection with the tragedy that led to the deaths of 29 miners in a mine explosion in West Virginia, and Massey was forced to revamp its corporate governance structure to better protect its workers. In Employees’ Retirement System of Rhode Island v. Marciano et al.,the Employees’ Retirement System of Rhode Island secured a $30 million settlement on behalf of the class and robust corporate governance reforms to provide a safe and fair work environment at Guess?, Inc.
Guillaume and Nico ultimately assert that, although Commingled Funds offer an appealing, low-cost solution, the potential negative implications cannot be understated. “Relinquishing shareholder rights that have historically paved the way for pension funds to effect labor and corporate governance reforms is detrimental to institutional investors’ ultimate goals that the companies they invest in conduct themselves legally and appropriately and always seek to maximize shareholder and worker rights. Internal and external governance action by shareholders is a crucial aspect of corporate governance and should be exercised by all investors.”
Partners Guillaume Buell and Domenico “Nico” Minerva are the authors of the informative article “Investing in Commingled Funds: Potential Negative Implications for Pension Funds” published in the Fall 2025 edition of NCPERS PERSist, which explores the drawbacks of investing in Commingled Funds for institutional investors.
While some pension funds have been drawn to Commingled Funds for lower-cost exposure to the stock market, the authors highlight the notable drawbacks of this investment strategy. Specifically, they note that when a pension fund invests in a Commingled Fund, it loses the right to direct where investments go and the legal rights associated with direct ownership of stock, such as voting in corporate elections, initiating corporate governance actions, and recovering losses and securing reforms through securities litigation. These legal rights have historically been “useful tools for pension funds and other institutional investors to wield when advocating for corporate change.”
A significant right that comes from direct ownership is the ability to participate in corporate elections, which allows funds to select nominees to a board of directors, approve mergers or acquisitions, and influence significant policy changes in a corporation’s structure and governance. Guillame and Nico emphasize that this form of direct participation “allows a pension fund to vote for positive change in a corporation while simultaneously bolstering its own interests” and “aligns with American tradition and institutional investors’ historical role as advocates for proper corporate governance policies.”
The ability to initiate corporate governance actions is another important tool of direct ownership. These actions can be used to address important issues such as labor practices, workplace safety, and employee rights. The authors point to proxy contests as well as private engagement, noting California Public Employees’ Retirement System’s 2020 reporting that its private engagement led to 20 corporations agreeing to change their voting standards, as key examples where initiating corporate governance actions has driven substantial change.
Noting securities litigation as a powerful shareholder tool to recover losses when corporate insiders violate the securities laws, Guillaume and Nico emphasize that “when a pension fund acts as lead plaintiff, they not only benefit themselves, but other class members as well.” Statistically, in recent securities class actions led by institutional investors, “the median settlement was over five times larger than without an institutional investor lead plaintiff,” and “where institutional investors and pension funds served as lead plaintiff, the median settlement recovered 18.6% more of the damages in the case.” For example, they note, the union pension fund that served as the lead plaintiff in the stockholder litigation against Dell Technologies secured a record-breaking $1 billion cash settlement for the class, representing the largest recovery prior to judgment ever achieved in a fiduciary duty action in the Delaware Court of Chancery and the largest shareholder settlement in any U.S. state court at the time.
Beyond monetary recoveries, the authors highlight the power to achieve corporate governance reforms through securities litigation. Guillaume and Nico point to actions involving Massey Energy and Guess?, Inc. as key examples. In Massey Energy Securities Litigation, the Massachusetts Pension Reserves Investment Trust, serving as lead plaintiff, held the company accountable to the tune of $265 million in connection with the tragedy that led to the deaths of 29 miners in a mine explosion in West Virginia, and Massey was forced to revamp its corporate governance structure to better protect its workers. In Employees’ Retirement System of Rhode Island v. Marciano et al.,the Employees’ Retirement System of Rhode Island secured a $30 million settlement on behalf of the class and robust corporate governance reforms to provide a safe and fair work environment at Guess?, Inc.
Guillaume and Nico ultimately assert that, although Commingled Funds offer an appealing, low-cost solution, the potential negative implications cannot be understated. “Relinquishing shareholder rights that have historically paved the way for pension funds to effect labor and corporate governance reforms is detrimental to institutional investors’ ultimate goals that the companies they invest in conduct themselves legally and appropriately and always seek to maximize shareholder and worker rights. Internal and external governance action by shareholders is a crucial aspect of corporate governance and should be exercised by all investors.”
Partners Guillaume Buell and Domenico “Nico” Minerva are the authors of the informative article “Investing in Commingled Funds: Potential Negative Implications for Pension Funds” published in the Fall 2025 edition of NCPERS PERSist, which explores the drawbacks of investing in Commingled Funds for institutional investors.
While some pension funds have been drawn to Commingled Funds for lower-cost exposure to the stock market, the authors highlight the notable drawbacks of this investment strategy. Specifically, they note that when a pension fund invests in a Commingled Fund, it loses the right to direct where investments go and the legal rights associated with direct ownership of stock, such as voting in corporate elections, initiating corporate governance actions, and recovering losses and securing reforms through securities litigation. These legal rights have historically been “useful tools for pension funds and other institutional investors to wield when advocating for corporate change.”
A significant right that comes from direct ownership is the ability to participate in corporate elections, which allows funds to select nominees to a board of directors, approve mergers or acquisitions, and influence significant policy changes in a corporation’s structure and governance. Guillame and Nico emphasize that this form of direct participation “allows a pension fund to vote for positive change in a corporation while simultaneously bolstering its own interests” and “aligns with American tradition and institutional investors’ historical role as advocates for proper corporate governance policies.”
The ability to initiate corporate governance actions is another important tool of direct ownership. These actions can be used to address important issues such as labor practices, workplace safety, and employee rights. The authors point to proxy contests as well as private engagement, noting California Public Employees’ Retirement System’s 2020 reporting that its private engagement led to 20 corporations agreeing to change their voting standards, as key examples where initiating corporate governance actions has driven substantial change.
Noting securities litigation as a powerful shareholder tool to recover losses when corporate insiders violate the securities laws, Guillaume and Nico emphasize that “when a pension fund acts as lead plaintiff, they not only benefit themselves, but other class members as well.” Statistically, in recent securities class actions led by institutional investors, “the median settlement was over five times larger than without an institutional investor lead plaintiff,” and “where institutional investors and pension funds served as lead plaintiff, the median settlement recovered 18.6% more of the damages in the case.” For example, they note, the union pension fund that served as the lead plaintiff in the stockholder litigation against Dell Technologies secured a record-breaking $1 billion cash settlement for the class, representing the largest recovery prior to judgment ever achieved in a fiduciary duty action in the Delaware Court of Chancery and the largest shareholder settlement in any U.S. state court at the time.
Beyond monetary recoveries, the authors highlight the power to achieve corporate governance reforms through securities litigation. Guillaume and Nico point to actions involving Massey Energy and Guess?, Inc. as key examples. In Massey Energy Securities Litigation, the Massachusetts Pension Reserves Investment Trust, serving as lead plaintiff, held the company accountable to the tune of $265 million in connection with the tragedy that led to the deaths of 29 miners in a mine explosion in West Virginia, and Massey was forced to revamp its corporate governance structure to better protect its workers. In Employees’ Retirement System of Rhode Island v. Marciano et al.,the Employees’ Retirement System of Rhode Island secured a $30 million settlement on behalf of the class and robust corporate governance reforms to provide a safe and fair work environment at Guess?, Inc.
Guillaume and Nico ultimately assert that, although Commingled Funds offer an appealing, low-cost solution, the potential negative implications cannot be understated. “Relinquishing shareholder rights that have historically paved the way for pension funds to effect labor and corporate governance reforms is detrimental to institutional investors’ ultimate goals that the companies they invest in conduct themselves legally and appropriately and always seek to maximize shareholder and worker rights. Internal and external governance action by shareholders is a crucial aspect of corporate governance and should be exercised by all investors.”
