With a £50 billion ($72.7 billion) portfolio, Ross Goobey, 54, is Britain's largest pension manager and its best-known shareholder rights advocate. Two years ago, frustrated by Hermes's returns, Ross Goobey launched the £650 million Hermes U.K. Focus fund, designed to confront managements deemed too slow at creating value for investors. Focus has since outperformed the FTSE 850 index by more than 5 percentage points annually. The fund has significantly boosted Hermes's overall return - and shaken up executive suites and strategy at such varied U.K. companies as newspaper publisher Trinity Mirror, automotive engineering and construction group Tomkins and money management firm Singer & Friedlander. "We think the techniques are exportable," says Ross Goobey, a passionate second-generation fund manager whose father, George, pioneered equity investing by U.K. pension funds in the 1940s.

The as-yet-unnamed European portfolio will be launched in the middle of next year, once Hermes has found "local partners capable of negotiating with local managements" and will initially focus on Germany, France and the Benelux countries, according to Ross Goobey. British Telecom Pension Scheme, which owns Hermes, has committed E100 million ($88 million) to the new venture, and Ross Goobey says he will raise at least E50 million more.

Employing an unusual strategy, Ross Goobey only invests his activist funds in companies already in the Hermes portfolio. "We will be investors both before and after we've provoked change," he says, comparing the U.K. Focus fund to a lighthouse that keeps companies "off the rocks." Of course, he adds, "if boards act perversely, our sanction is to find new management." Witness Mirror Group chief executive David Montgomery, forced out by Ross Goobey in January 1999. When finance director John Allwood took over as CEO, he dumped money-losing ventures and merged with Trinity - more than doubling Mirror's stock price in the process.