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by neogodless 2762 days ago
Maybe I'm misunderstanding something, because I find it odd to hear this from Bogle himself. Vanguard doesn't own or control the equities in their index funds. You do. Vanguard is structured so that you can own your piece of the index fund pie. And while there are large holders of index funds such as Vanguard's Total Stock Market fund, I don't think there are any majority holders. For 51% of equities to be channeled through Vanguard but owned by stockholders does not seem to be a risk.

If I'm wrong, can you explain what I'm wrong about?
3 comments
jonbarker 2762 days ago
The risk is that Vanguard, State Street, and Blackrock, employ small 'governance teams' whose job is to vote on your behalf. Since they don't have an explicit fiduciary duty to the shareholders of the index funds, but do have an implicit one, it can be argued that you don't actually have a vote in how the component companies are run. More here: https://outline.com/njXPEu
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jschwartzi 2762 days ago
Vanguard explicitly asks you to vote your shares. I've gotten letters in the past asking me to cast a vote.
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travisp 2762 days ago
Vote on mutual fund governance questions. Not on each of the thousands of companies that the fund is invested in.
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jonknee 2762 days ago
You do not get 3,641 letters asking you to vote in each of the companies that make up VTI. If you own shares of a company directly you will get a letter and you may get a letter about governance of the fund you own, but not for the individual names in it (you own a piece of something that owns the actual shares).
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clairity 2762 days ago
the issue arises because typically the fund acts as your proxy when it comes to voting rights (most index investors are looking for a reliable and easy return, not a voice in corporate governance).
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chmaynard 2761 days ago
> Vanguard doesn't own or control the equities in their index funds. You do.

Is this statement correct? Your argument hinges on it, so it's important to get a definitive answer.

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privateSFacct 2761 days ago
No it is not. It is 100% false with respect to voting rights.

The most visible sign of Vanguard’s engaged ownership is our funds’ proxy voting at shareholder meetings. We have an experienced group of analysts on our Investment Stewardship team that evaluates proposals and casts our funds’ votes in accordance with our voting guidelines.

Fund holders do not vote on corporate issues of stocks held by vanguard.

And of course, the owner of stocks held by a mutual fund are the mutual fund. Is that not clear to most people?

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