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It's absolutely not the role of index funds to dictate strategy to the companies they own. The whole premise behind an index fund is investors don't know which
by ralph84 7y ago
It's absolutely not the role of index funds to dictate strategy to the companies they own. The whole premise behind an index fund is investors don't know which strategy is best, so just buy everything.
Where funds could have an impact is tying more of management compensation to long-term results. Longer vesting schedules on stock compensation would be an easy place to start.
- basch 7y agoTheres an observer effect type thing going on either way. If they invest in certain behaviors, companies will start behaving that way to get investments. At the end of the day, the investors have agendas (the large stakeholders agenda is generally global stability aka lack of disruptive change) and they invest in ways to achieve said goal. GE fit that model AND their collapse is a great illustration of why attempts at safe passive investing eventually lead to stagnant and obsolete investments.