Congressman Bill Huizenga (R-MI), Ranking Member of the Investor Protection, Entrepreneurship, and Capital Markets Subcommittee and Congressman Blaine Luetkemeyer (R-MO), Ranking Member of the Subcommittee on Consumer Protection and Financial Institutions introduced HR 8521, the INDEX Act, to respond to concerns about the consolidation of voting power in a handful of institutions by requiring any…
Category: index funds
The 70 BlackRock Analysts Who Speak for Millions of Shareholders – WSJ
On one hand, the concentration of share ownership has addressed some of the issues connected to the separation of ownership and control. On the other hand, there are still intermediaries between the beneficial holders and the companies whose stock is held on their behalf. This is all the more reason for a strong, enforceable fiduciary…
Are Enhanced Index Funds Enhanced?
Edwin J. Elton (NYU), Martin J. Gruber (NYU), and Andre B. de Souza (St. John’s University) have a new study about “enhanced” index funds. Of course the whole idea of index funds is that they involve no enhancements at all; they just track an index like the S&P 500. But “enhancements” have become increasingly popular…
New blood at Wall Street’s old guard rattles Corporate America
This year marks a sea change as top funds throw more of their weight behind investor challenges to companies on environmental, social and governance (ESG) issues and put companies on notice by often choosing to publicize how and why they voted, a Reuters review of voting results and fund firms’ new disclosures shows. A record…
A Glimpse of a Future With True Shareholder Democracy – The New York Times
[L]ack of proxy voting capability leaves vast numbers of investors out of the equation, and gives corporations inordinate power. Consider that roughly half of all American households, comprising tens of millions of people, have a stake in the stock market. But most own equities indirectly through funds — mainly index funds. That leaves fund managers…
New Study on Proxy Voting by Index Funds — Our Supplemental Comment to the SEC
Another supplement to our earlier comments: We incorporate by reference and make a part of this record a study by joseph Farizo, (Black)Rock the Vote: Index Funds and Opposition to Management (March 2020) with its conclusions, conclusively and decisively refuting the unsupported allegations of “robs-voting” and supports our description of the conflicts of interest fund…
The Power of Voting: Active Ownership for Index Strategies
Index firm Solactive writes: September 2019 marked a major milestone in US financial history as the assets managed under passive strategies (the selection of stocks based on a mechanical, rules-based approach) surpassed those under active strategies. The rise of ESG and its latest evolution, active ownership, is another megatrend within the investment world. Are these…
The Hidden Dangers of the Great Index Fund Takeover – Bloomberg
We have repeatedly warned about the problem of index funds, including VEA Chair Robert A.G. Monks’ book Citizens Disunited, with extensive data on “drone” companies (with stock ownership tracking the index) and VEA Vice Chair Nell Minow was one of the judges who selected Index Funds and the Future of Corporate Governance: Theory, Evidence and…
State Street CEO Takes the Long View on Shareholder Activism – WSJ
As CEO of State Street Corp., STT 2.10% Ronald O’Hanley is on the front lines of shareholders’ push to bring change to corporate boardrooms. State Street, STT 2.10% whose money-management arm oversees $2.7 trillion in assets, has amassed significant governance power in recent years as investors shifted more money into the lower-cost, index-tracking funds it…
Want a Bigger Say on Corporate Behavior? Move Your Money – The New York Times
From our former colleague Jackie Cook — index fund voting patterns may be an unhappy surprise to their investors. [W]hile index funds offered by different companies were often nearly indistinguishable in fees and performance, the voting behavior of the funds was very different. Vanguard and BlackRock, the two biggest fund managers, tended to side with…
ValueEdge Advisors 