Standstills

I don't get it.  What is the basis for an agreement where an investor agrees to limit future share purchases in exchange for representation on the board of directors?  Is it a bad thing for someone to acquire a large block?  Even if it is, isn't there a conflict of interest in the group making the deal (the current board, I assume).  In fact, can a board even strike a binding agreement on who will be on the board of directors?  Perhaps votes are such a fiction that nomination (perhaps this can be agreed) are sufficient?  I'm really very confused by the conflicts and the message.

fund management and alternatives

This week's Economist has an editorial regarding funds that says:

"A survey by Watson Wyatt, a consulting firm, found that the cost of running a pension scheme increased by around half between 2003 and 2008. That was because schemes allocated more of their portfolios to hedge funds and private-equity managers, which charge much higher fees. Chasing performance by paying higher fees might work for individual investors, but in aggregate it is doomed to fail. The return to the average investor is the market return minus costs; if costs rise, returns must fall."

I don't think this is quite right if hedge funds and private-equity managers are investing in under-represented parts of the market. In that case, although the statement "The return to the average investor is the market return minus costs" is true, it unfairly treats the "market" as being the entire market even where it is not.

How do bond funds work?

Or, more accurately, how do bond funds manage to avoid depressing their returns when investors stream in (invariably at the peak, rather than at the bottom)? When new money comes in, the funds need to purchase more bonds - but if money comes in when bonds are expensive, won't that hurt historic investors?