Activist and event-driven hedge fund Effissimo Capital Management has joined the likes of Maple-Brown Abbott and Wellington Investment Management on the $237 billion Future Fund’s roster of active equity managers.
The Singapore-based Effissimo has tried to avoid the spotlight despite playing a decisive role in several of the biggest governance stories in Japanese corporate history.
It was founded in 2006 by former employees of Yoshiaki Murakami, who pioneered activist investing in Japan with his “Murakami Fund” but was later hit with a two-year suspended prison sentence for insider trading in the shares of Nippon Broadcasting System. Effissimo itself has won backing from the likes of Canada Pension Plan Investment Board as well as a host of university endowments, according to media reports.
In 2021, with a nearly 10 per cent stake in Toshiba, Effissimo called for a probe into allegations that the company had attempted to pressure investors, including the Harvard University Endowment, into voting for resolutions recommended by its management. That probe was supported by a majority of shareholders – which, in Japan, have historically sided with management – and resulted in the removal of the company’s chairman.
Flush with cash from the takeover of Toshiba by a consortium led by Japan Industrial Partners, it took a 2.5 per cent stake in Nissan in November as the company’s shares cratered. It has pressured the company for more than a decade to buy Nissan Shatai, its own subsidiary, where Effissimo is 30 per cent of the shareholder register.
The Future Fund declined to comment on the appointment of Effissimo, but the move is in keeping with its return to active management in areas of the equity market where managers demonstrate “skill, not luck”. That return was precipitated by a belief that market and macroeconomic volatility, as well as geopolitical uncertainty, would limit the equity beta returns the Future Fund had relied on since cleaning out its roster of active equity managers in 2017.
“Conditions have changed,” Future Fund chief executive Raphael Arndt said in 2023. “Economies are diverging and companies can better distinguish themselves in a more challenging environment. As a result, active alpha-seeking strategies in our $65 billion listed equities program are increasingly attractive.
“We are using new technology to better understand the drivers of returns being delivered by investment managers – to better understand whether skill actually exists or whether managers are just applying a mechanical strategy which can be re-created cheaply.”
The Future Fund already has an active Japan allocation sitting with Wellington and was running an overweight to the country prior. Back in 2023, Arndt flagged healthy corporate balance sheets, reasonable asset values and improved governance as some of the reasons the Future Fund was keen to invest more.
