The GMB union will become the first trade union in the world to invest in an activist fund manager. About 10% of the £180m fund managed by the UK pension fund is to be invested in Hermes Focus, managed by Hermes Lens.
Focus funds push for improvements at underperforming companies. The fund's first public victim was David Montgomery, who was ousted as chief executive of Mirror Group after complaints from shareholders led by Hermes.
The fund has also pushed for changes at BTR, the engineering group, and GRE, the insurance company. Peter Butler, chief executive of Hermes Lens, welcomed the £18m investment from the GMB.
"We believe that the GMB is the first union in the world to invest in an activist pension funds and we hope that others follow their lead," he said.
Unions manage a significant proportion of the UK's pension funds. However, the investment raises interesting questions for union pension funds as activist shareholders can demand job cuts or divestments.
Mr Butler said yesterday that Hermes' desire to enhance shareholder value did not conflict with the goals of the GMB pension fund.
"Our whole approach is about long-term value. We are not about a quick fix," he said.