
Passive funds took power away from investors - maest
https://www.matter-funds.com/how-passive-funds-took-power-away/
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arkades
So, this is the second front page post by the same user this morning. One
takes a direct shot at vanguard (“tax dialysis”), and the next an indirect
shot (“they don’t use your votes right - but we do! Invest with us!”). The
user only has four posts in their entire history, and three are on the same
topic and posted in the last 24 hours.

This ... looks off to me.

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Radle
It's quite obvious what happened there, but it's not necessary bad.

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wslh
Please explain...

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542458
A user has a bone to pick/an incentive to make this point, which normally
leads to bad submissions. However, in this case it is a legitimate issue to be
discussed.

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arkades
I actually assumed the account was compromised. The account managed to not
really post anything in the preceding five years, and then went on an
astroturfing spree in a single twenty four hour period.

You’re probably right, though.

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anonu
This is a topic that's warming up in the investment space. There is a company,
SAY, that is trying to get more shareholder participation.

Ultimately, the regulations need to change to allow fund holders to vote their
stock. And this certainly can be enabled by technology.

In this scenario you wouldn't necessarily vote all 500 stocks of the S&P500
but you would set your preferences (always support board gender diversity, say
on pay, etc... ) And the service would auto vote along your preferences.

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RickJWagner
Passive (index) funds have grown because they work.

Read "A Random Walk Down Wallstreet" or "The Bogleheads Guide to Investing",
you'll see it clearly laid out. For the Cliff's Notes version, turn to YouTube
and watch Warren Buffet, Jack Bogle, etc.

Index Funds enrich their investors. Actively managed funds enrich their
providers.

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plouffy
Pretty meaningless to present the numbers for passive funds without including
the numbers for active inestors.

~~~
smahony
Hi I wrote this.

The numbers for active funds differ depending on the kind of fund we're
talking about. For the big mutual fund complexes it's actually pretty similar
to passive funds (see here
[https://www.fundvotes.com/](https://www.fundvotes.com/)). To give a bit of
context someone like Fidelity International [where I used to work] is at ~70%
([https://www.fidelity.co.uk/voting-
record/](https://www.fidelity.co.uk/voting-record/)), which is about as low as
i've seen.

The point isn't that passive funds are uniquely bad, because they aren't, but
it matters more because of how big they have become.

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JediWing
The point is a good one that few people realize. If your holdings are in index
funds, you're forfeiting your right to vote. It's almost criminal.

I don't know if a separate fund is the answer, though. Will my 401k offer
Matter S&P shares? I sincerely doubt it.

To me this is a policy proposal that I'm surprised an Elizabeth Warren hasn't
proposed. It's centrist in that it seems to really in inequality through
corporate governance.

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bitxbit
This is not a problem specific to passive funds. Many companies are structured
this way and professional investors are OK with it. Look at BABA for example.
I will say this: the whole point of equity is to give you control and
dividends. If you don’t get both, you’re effectively investing in an elaborate
ponzi scheme.

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jshaqaw
Good luck and a fine sentiment but the free rider incentives will favor
cheaper funds with no corporate governance ambitions. The market for investors
who care enough about corporate governance to subsidize others isn’t big
enough for critical mass in a scale business.

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jypepin
I get that shareholders have powers to vote etc. but... are those vote usually
used?

I have both ETFs and individual stocks, and in neither cases I use my
shareholder power to vote or anything.

~~~
username444
And generally, unless you understand the business deeply and are actively
aware of the trade-offs of your vote, you shouldn't be voting.

We can all yell "pay parity" and "tie CEO compensation to worker
compensation", but there are trade-offs. It means high performers who earn
their pay are more likely to go elsewhere, where they'll be properly
compensated. And who takes their place? Most likely, someone less qualified
who is on the other side of the bell curve.

I'm not saying CEOs are justified in their pay or the rank and file don't
deserve better pay, but there's no free lunch. Business is complicated and the
current policies were put in place with CAREFUL considerations of the trade-
offs. If you don't understand them at a deep level, don't get involved.

~~~
batty_alex
> We can all yell "pay parity" and "tie CEO compensation to worker
> compensation", but there are trade-offs. It means high performers who earn
> their pay are more likely to go elsewhere, where they'll be properly
> compensated.

Other than more than they're currently making, what does "properly
compensated" mean? Should we not use our votes to help decide that?

> Most likely, someone less qualified who is on the other side of the bell
> curve.

Damn. Sucks for the board who chose a winner the first time and couldn't find
another winner.

> Business is complicated and the current policies were put in place with
> CAREFUL considerations of the trade-offs. If you don't understand them at a
> deep level, don't get involved.

You're suggesting we all throw our hands up in the air and "let it be?" This
is such a strange argument.

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username444
Re: proper compensation - this is a good question, and I don't have the answer
to it. Headhunters might.

Re: the rest - these are straw man arguments. I never made those claims.

My only point was that the OP shouldn't feel bad about not voting. If he's
uneducated and unqualified to understand on a business' operations, which we
all are because we have LIVES outside of stalking a corporation, he should
leave the well paid people to make those decisions.

Just because you CAN do something doesn't mean you SHOULD. 99% of shareholders
and employees within a company see a very very tiny sliver of what's really
going on.

If you dont like a company for a particular reason, simply dont put your money
into it.

