Let me begin with a quote from the article:
William McNabb, chairman and CEO of Vanguard, said in 2015 that, “In the past, some have mistakenly assumed that our predominantly passive management style suggests a passive attitude with respect to corporate governance. Nothing could be further from the truth.”
However, the article goes on to say “The Big Three” (BlackRock, Vanguard, and State Street) vote with management 90% of the time and mostly against shareholder proposals. So, one could reach at least two different conclusions:
1. McNabb is lying and The Big Three are really just three big rubber stamps for everything management says.
2. McNabb is telling the truth. The Big Three spend significant time weighing the pros and cons of management and shareholder proposals. It just so happens the analysis shows that managers know how to run firms better than shareholders.
I’m leaning towards #2 for now. I sort of have to since my 401k holdings are with Vanguard.
Meet the three firms that own corporate America
A fundamental change is underway in stock market investing, and the spin-off effects are poised to dramatically impact corporate America. In the past, individuals and large institutions mostly invested in actively managed mutual funds, such as Fidelity, in which fund managers pick stocks with the aim of beating the market. But since the financial crisis of 2008, investors have shifted to index funds, which replicate established stock indices, such as the S&P 500. The magnitude of the change is Read the full story
Shared from Apple News