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by vanrohan 499 days ago
I wish there can be more focus on the voting rights for passive funds. Investors are concentrating voting power with these fund managers, just giving away their voting rights for free. I'd like to see better investor voting management systems become more available for "pass through" voting for passive fund investors.

[1] https://vanderwalt.de/blog/etf-vs-direct-indexing-investing-...
2 comments
bluGill 499 days ago
It isn't possible to have an informed vote for the 500 companies in a S&P index fund and still have a life.

I probably have an informed opinion on the company I work for - but I don't have enough shares to matter. The other 499 I know nothing about.

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vanrohan 498 days ago
Individually we don't have significant shares, but aggregate it up to BlackRock / Vanguard level, then there is real influence. What is that influence worth? that influence given to the fund manager should be priced correctly. I agree, you probably dont want to have to vote on 500 companies, but to start with it should be an "opt out" decision if you don't care. Alternatively you could allocate your votes to a proxy entity that aggregates like minded investors votes.
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samus 499 days ago
Having voting rights kind of goes against the point of tracking an index though. Better invest in ESG funds or something like that. And for funds that use synthetic replication there is nothing to vote on in the first place.
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vanrohan 498 days ago
> Having voting rights kind of goes against the point of tracking an index though.

Not sure I follow how voting rights goes against the point of tracking an index? I'd say the value of the index implicitly prices in the value of the voting rights in the constituents. So if your index does not contain the voting rights, should the index price not be different?

> And for funds that use synthetic replication there is nothing to vote on in the first place.

There are all kinds of funds, of course when it's 100% synthetic then so be it. But if it holds a representitive sample of Russell 3000, then those votes count.

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samus 497 days ago
The provider of the index is usually not the same entity as the fund manager. Although the fund is actually quite free in the choice of securities that it can use to track the index. It depends on the fine print of the prospectus. It could conceivably offer its shareholders voting rights regarding the presence of controversial items in its portfolio, at the risk of underperformance compared to the reference index.
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