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> I don't really see how Vanguard gets "power" here. They have no choices. They do have voting rights in companies that are part of the index. In my judgement,
by lambertsimnel 1y ago
> I don't really see how Vanguard gets "power" here. They have no choices.
They do have voting rights in companies that are part of the index. In my judgement, that's the more reasonable interpretation of the GP's point.
On the other hand, the more of the market held in index funds, the less is available to active investors to perform their valuation service, as described elsewhere in this discussion.[0]
[0] https://news.ycombinator.com/item?id=43859024 https://news.ycombinator.com/item?id=43859024
- crazygringo 1y agoAh thanks, I hadn't thought about that aspect. That totally makes sense. Is there any information on how Vanguard exercises this? Looking online it's hard to find any actual reporting on it. It seems like Vanguard could either not participate in governance at all, participate in a kind of "neutral" fiduciary way designed to ensure accountability but without pissing off any segment of Vanguard investors, or could be more "activist" which is where it could abuse that power. Is there some kind of US law that forces it to operate in a fiduciary way? Or isn't that just what's best for business anyways? I'm still wondering if there's any realistic opportunity for abuse of power here.
- bix6 1y agoThey are fiduciaries and it seems they take the more neutral stance but that doesn’t guarantee anything in the future which is one of my concerns. https://corporate.vanguard.com/content/corporatesite/us/en/corp/how-we-advocate/investment-stewardship/index.html https://corporate.vanguard.com/content/corporatesite/us/en/c...