Vanguard will begin testing providing individual shareholders in various equity index funds more alternatives regarding how their shares will receive votes early next year.
As the power of big money managers over contentious issues comes under increasing criticism, Vanguard Group, of course, intends to introduce a system that would allow retail clients more control over how their shares will get votes at company meetings.
Anyway, Anne Robinson, general counsel of Vanguard, wrote in an email: “as the only investor-owned asset management company, Vanguard is ideally positioned to partner with Main Street investors on ways to participate in the proxy voting process.”
Besides, the opportunity to voice their preferences for how the underlying shares of their equity index holdings are voted will be provided by this early 2023 pilot, according to the investors-owners of the company.
Furthermore, investors should have additional voting alternatives in the experiment. Indeed, this includes the choice to follow corporate management recommendations, abstain from voting, or seek advice from a third party. What is more, the stewardship staff at Vanguard assists in managing the voting practices for nearly 30 million investors.
Moreover, Vanguard pointed put that “its clients had a variety of viewpoints”. Also, the firm added that growing number would appreciate the chance to comment on how their index funds vote on significant proxy matters at the businesses held in the funds”.
In fact, investors and lawmakers are increasingly questioning big asset managers about the excessive influence that corporations can have over the corporate world. And, each of the top five shareholders in the majority of S&P 500 firms, including BlackRock, Vanguard, and State Street, are the three largest index-fund managers, giving them a lot of influence at shareholder meetings.
In addition, BlackRock announced in June that clients with a combined asset value of nearly $530 billion had taken part in its initiative to give institutional investors greater power over the voting of their shares in index equities funds.
However, this year, the pushback against asset managers over ESG — environmental, social, and governance — issues has increased.
