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Yes, index funds vote. They tend to push for shareholder-friendly issues (independence of corp board, blocking poison pills, etc) and less on 'political' issue

by evgen 7y ago

Yes, index funds vote. They tend to push for shareholder-friendly issues (independence of corp board, blocking poison pills, etc) and less on 'political' issues. Some research [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2475150 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2475150] has shown that you can see a significant difference between companies in the index and not in the index on these issues. Most index funds are not as active as other investors, but they tend to maintain voting shares rather than get discounted non-voting shares because the latter always end up getting screwed by the voting shares...

Scoundreller 7y ago
> Most index funds are not as active as other investors, but they tend to maintain voting shares rather than get discounted non-voting shares because the latter always end up getting screwed by the voting shares... How? In my (Canadian) experience with dual-class shares, they’re usually the same slices of the pie and the same dividend payouts. The usual problem is when the voting shares are impossible to actually buy, so you’re at the whims of the founding family’s ego. But then you don’t even have the choice of buying the voting. And sometimes when you could, the founders own 51%+ anyway, so you’re just buying a vote you can’t use and paying that premium to the founding family again.
- evgen 7y ago
  Voting shares can vote on whether or not the company issues more shares, pays out accumulated profit as dividend, takes on a debt load that may look good in the short-term but will have a crippling impact on the long-term, etc. An index fund cannot just decide to dump a company's shares because management has decided to drive the company off a cliff for the sake of a quick payoff, so paying a bit extra for voting rights tends to be in their interest.
- walshemj 7y ago
  Not all stock indexes allow such unbalanced types of share classes.

by evgen 7y ago

Scoundreller 7y ago

> Most index funds are not as active as other investors, but they tend to maintain voting shares rather than get discounted non-voting shares because the latter always end up getting screwed by the voting shares... How? In my (Canadian) experience with dual-class shares, they’re usually the same slices of the pie and the same dividend payouts. The usual problem is when the voting shares are impossible to actually buy, so you’re at the whims of the founding family’s ego. But then you don’t even have the choice of buying the voting. And sometimes when you could, the founders own 51%+ anyway, so you’re just buying a vote you can’t use and paying that premium to the founding family again.

evgen 7y ago
Voting shares can vote on whether or not the company issues more shares, pays out accumulated profit as dividend, takes on a debt load that may look good in the short-term but will have a crippling impact on the long-term, etc. An index fund cannot just decide to dump a company's shares because management has decided to drive the company off a cliff for the sake of a quick payoff, so paying a bit extra for voting rights tends to be in their interest.
walshemj 7y ago
Not all stock indexes allow such unbalanced types of share classes.