SAN FRANCISCO -- The Securities and Exchange Commission's recent decision to block shareholders from nominating outside directors has put a damper on an important strategy for institutional investors.The ruling, which allows companies to bar shareholders from submitting proposals, has sent institutional shareholders scrambling for alternatives. They can petition the SEC to reconsider the decision, negotiate behind the scenes with company boards for more pro-shareholder policies, or publicly confront boards with their demands for change. Indeed, the SEC's Nov. 28 decision could lead to an unusually contentious season in 2008, according to RiskMetrics. In recent years, big institutional investors have been diving into corporate governance-styled investments that are typically run by activist investment advisors. These investments are distinct from many hedge funds by what they exclude: short strategies, arbitrage, leverage and overly hostile tactics, says Andrew Junkin, managing director at Wilshire Associates. "The ones we've evaluated go long only. They are friendly activists who try to engage with management." And these investments have proven profitable. Junkin estimates that such investments beat the benchmarks of passive investments by 3% to 5% "over a long period of time." Although such firms have been around for a decade, they're gaining traction among institutional investors. One is led by former SEC Chairman Richard Breeden, whose corporate governance-style investment company listed assets under management of $770.6 million at the end of September, more than double its holdings in March.