When you own shares of a business, as a partial owner, you have the right to vote on how the business will respond to various important issues facing the company. You are a part of the business’s governance. You have influence.
When you own mutual funds though, your stock ownership is indirect. You own shares of a mutual fund, which owns shares of various companies. And when that’s the case, it’s the fund management (rather than you, the fund shareholder) that gets to vote the various shares that the fund holds. As fund shareholders, we have largely abdicated our our corporate governance rights and responsibilities.
This issue isn’t new. (Here’s a 2002 letter from Jack Bogle to the SEC, voicing his concerns on the topic, for example.) But as indirect ownership of stocks (via mutual funds) has been growing steadily for several decades, the issue becomes increasingly important each year.
Fortunately, some fund companies have been responding by creating systems that allow their shareholders to indicate, at a broad level, how they would like their portion of shares to be voted.
Vanguard has been gradually rolling out their program (“Vanguard Investor Choice”) since 2023. And they just announced that they’re adding more funds to the program (including all share classes of the Vanguard 500 Index Fund/ETF), which will collectively triple the assets eligible to participate in the program.
- Vanguard Adds Three New Funds, Including Vanguard 500 Index Fund, to Vanguard Investor Choice
- More information about the Vanguard Investor Choice Program (including how to enroll) here
Other Recommended Reading
- QCDs (and Other Donations) for Jonathan Clements’ Legacy from Andrew Forsythe
- IRS Direct File Won’t Be Available Next Year from Fatima Hussein
- How OBBBA Alters Charitable Deduction Strategies for 2025 and 2026 from Maria Murphy
- The Complexities of Moving Toward Simplicity from Allan Roth
- When to Claim Social Security: How Much Does It Matter, Anyway? from Harry Sit
- Should You Just Buy Stocks Until You Die? from Jason Zweig (WSJ)
- HSA vs. FSA: How to Choose One from Margaret Giles and Michael Schramm
- Flat Fees, Real Alignment: Why Advisors Need to Rethink the AUM Habit from Carson McLean
- The Peter Bernstein Rule: Beware Empty Memory Banks from William Bernstein and Edward McQuarrie
Thanks for reading!
What is the Best Age to Claim Social Security?
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