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Old 10-08-2016, 06:29 PM   #61
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I think the biggest "crime" all mutual fund companies commit is how they vote the shares owned by the fund. Another of my many "it'll never happen" ideas, but we should be able to have the mutual fund vote shares based on an investor profile for how we want our proxy votes cast.

For instance, if I were voting my own shares, I'd never enhance executive compensation for people already making multiple millions per year. Those people might think they're doing a better job than anyone else in the world, but I bet hundreds of qualified people could do at least 99% as well (probably better) and be compensated at a rate of 10% of what the current executive is getting. Not only that, they would be very happy to do it, and not have their hand out for more.

+1
Companies have become beholden to the mutual funds and not the people that put up the money. That's not Fido's fault.


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Old 10-08-2016, 06:37 PM   #62
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+1
Companies have become beholden to the mutual funds and not the people that put up the money. That's not Fido's fault.


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Blame technology. Doing the accounting for the requirement is extreme. Likely met when SQL can effectively query tables spanning Yoda bytes of data, storage is all on chips and nightly cycles are 48 hours long.

Seriously it's enormous expenditure that benefits only a few, if any. Most of us don't own enough to move proxy votes at all. I watched a coworker learn the lesson of the distribution of account ownership the hard way.
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Old 10-08-2016, 08:26 PM   #63
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I switched from Vanguard to Fidelity. Better information available, more user friendly, but mainly that I get choices for indexed ETFs that are not available at competitive prices at Vanguard. I have made more because of my move. I made this years SWR since Brexit solely from Fidelity (which is when I switched).

Service from both were always great. I have nothing bad to say about Vanguard. I don't buy IPOs, nor do I plan to.

I don't ask for any broker advice. I research and then I make my decisions. One fund family may be better than the other in broker advice, I wouldn't know.
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Old 10-08-2016, 09:49 PM   #64
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Blame technology. Doing the accounting for the requirement is extreme. Likely met when SQL can effectively query tables spanning Yoda bytes of data, storage is all on chips and nightly cycles are 48 hours long.
Improvement could be done with very little processing...each owner would answer one survey, one time, that had a few dozen questions that provide a feel for how they'd likely vote on real proxy questions. When it was time for the fund to vote shares, they'd run a report against the surveys of current owners. Maybe the report would say that 72% of the owners of the mutual fund said "hell no" on executive compensation, then vote that way. It's not "air tight" (would require interpretation), and that's why it'll never happen. Perfection being the enemy of an improvement over doing nothing, and all that.

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Seriously it's enormous expenditure that benefits only a few, if any. Most of us don't own enough to move proxy votes at all. I watched a coworker learn the lesson of the distribution of account ownership the hard way.
You MUST be talking about owning individual shares of stock. Then, I agree. But collectively, there is a metric f-ton of leverage in the proxies that are voted by mutual fund companies. All that leverage is wasted, and it's the "crime" I mentioned in my (admittedly thread hijacked) comment.
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Old 10-08-2016, 10:10 PM   #65
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Maybe the report would say that 72% of the owners of the mutual fund said "hell no" on executive compensation, then vote that way. It's not "air tight" (would require interpretation), and that's why it'll never happen. Perfection being the enemy of an improvement over doing nothing, and all that.

You MUST be talking about owning individual shares of stock. Then, I agree. But collectively, there is a metric f-ton of leverage in the proxies that are voted by mutual fund companies. All that leverage is wasted, and it's the "crime" I mentioned in my (admittedly thread hijacked) comment.

That's the funny thing about fund processing and proxies, they don't let you guess or not be airtight. Real numbers, not maybe.

The comments apply to both equally. The bulk of shares of either belong to a very few investors, who individually will vote their shares the same. So while I agree that it would be great to do it that way, I'd be shocked to see any different outcome. Of course as DW says I'm frequently wrong.
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Old 10-09-2016, 11:45 AM   #66
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That's the funny thing about fund processing and proxies, they don't let you guess or not be airtight. Real numbers, not maybe.

The comments apply to both equally. The bulk of shares of either belong to a very few investors, who individually will vote their shares the same. So while I agree that it would be great to do it that way, I'd be shocked to see any different outcome. Of course as DW says I'm frequently wrong.
Then add another level of complexity for any 401k accounts! Imagine the HR company person getting inundated by literally millions of clueless investors asking "What's this? How should I vote? What does this mean? What does that mean?" even if the HR personnel put tape on their mouths to avoid getting sued for "giving voting advice", it will still be a massive headache for them, in addition to the 401k providers (who aren't getting paid enough to handle all of the intermediate recordkeeping and correspondence of such a voting effort).

Also, it would require boards to accept partial voting from each shareholder! I don't know of any company that allows this, other than some that allow you to vote individually on the board of directors. If the companies allow ETFs and mutual funds to vote partially with shares, then they would be required (I expect) to allow all other stockholders to vote partially with their shares. So now they have to have calculations on every vote for every shareholder on how many were cast "Yea", "Nay" and "Abstain", for every proposal.

Perhaps the only vote of consequence for nearly every election is the compensation of executives - and that is only an advisory vote that has no weight. So barring any truly important vote, I honestly don't see much benefit. It's not like people can actually vote on the compensation and have a real impact. So what if 90% of the people vote "no" on the compensation level - has any board actually changed anything as a result of it?
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Old 10-09-2016, 07:13 PM   #67
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...add another level of complexity for any 401k accounts! Imagine the HR company person getting inundated by literally millions of clueless investors asking "What's this? How should I vote? What does this mean? What does that mean?" even if the HR personnel put tape on their mouths to avoid getting sued for "giving voting advice"
That would be a problem, but we know how good megacorps are at not dealing with problems, lol! Here's a book on corporate governance...figure it out.

As to the "real numbers", obviously the mutual fund holds X shares and they all are voted today. I don't know how they decide how to vote them. Based on the whims of the fund manager? Anyway, if the survey said 72% were against additional executive compensation and 3% were for additional executive compensation, that would only leave 25% of the shares to be voted on the whims of the fund manager. Doesn't seem like rocket science to me. All X shares got voted. And from my (admittedly limited) experience with individual shares (through proxyvote.com and those kinds of sites), you can vote agree, disagree, or abstain on every item being considered.

As to if having the actual owners have their preferences reflected would make a difference (the owners that own through mutual funds), that's a different discussion. I would imagine the outcome of these proxy votes must mean something, or why would they bother having a vote?
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Old 10-09-2016, 09:23 PM   #68
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But let me put a question, how many bother to vote with proxies for shareholder meetings with 100 to 200 shares of a company? I know I don't because I know my vote won't make much of a difference. I did vote once to disapprove the pay at citicorp however. Of course today that is easy with the ability to vote in shareholder votes online.
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Old 10-09-2016, 09:28 PM   #69
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The point of the thread is that the Johnson family has their own interests at heart and that is a conflict of interest and they shouldn't be able to do that.
It is not a conflict of interest. Their own best interest is to be good for their customers. How hard is that?

VG is owned by its customers. Think it isn't in VG's owners' best interest to look out for its customers?

It's as if profit is a sin.
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Old 10-09-2016, 09:37 PM   #70
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It is not a conflict of interest. Their own best interest is to be good for their customers. How hard is that?

VG is owned by its customers. Think it isn't in VG's owners' best interest to look out for its customers?

It's as if profit is a sin.
Note that if you stick with broad index funds then the whole issue of IPOs etc becomes mute. Broad index funds won't buy them when they come out since they won't be in say the s&P 500 index for a while at least. If you go actively managed yes they could want to buy into the IPO.
However the whole IPO market is totally screwed up favoring the selling brokers "friends" Why for example does the brokerage house have to hold the IPO stocks even for a few seconds, versus the company selling directly on the market when the brokerage would still get the commissions. The whole idea that the company should get less money than it could because the stock should pop on IPO day is the broker shafting the company going public, but its a universal shafting.
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Old 10-09-2016, 09:52 PM   #71
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I think the biggest "crime" all mutual fund companies commit is how they vote the shares owned by the fund.
+1. I don't like the whole mutual fund business model in large part for that reason.
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Old 10-09-2016, 11:37 PM   #72
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Yeah, I hate 'em too. All of them and the ETF's.

I vote my shares every year, just like I always have. My advisor buys 'em, but I vote 'em.
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Old 10-09-2016, 11:58 PM   #73
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As to the "real numbers", obviously the mutual fund holds X shares and they all are voted today. I don't know how they decide how to vote them. Based on the whims of the fund manager? Anyway, if the survey said 72% were against additional executive compensation and 3% were for additional executive compensation, that would only leave 25% of the shares to be voted on the whims of the fund manager. Doesn't seem like rocket science to me. All X shares got voted. And from my (admittedly limited) experience with individual shares (through proxyvote.com and those kinds of sites), you can vote agree, disagree, or abstain on every item being considered.

As to if having the actual owners have their preferences reflected would make a difference (the owners that own through mutual funds), that's a different discussion. I would imagine the outcome of these proxy votes must mean something, or why would they bother having a vote?
Two other issues:

1) Rounding - given the numbers involved, when you stop and do the actual math, there would be so much rounding that many people simply wouldn't get even 1 "share" to vote. Then who gets to vote for all of those that had to have their positions rounded down? Answer: The fund manager anyway.

2) Simple overwhelming - so you own an S&P 500 fund. And an international fund. Just 2 funds! Not much to track. But you would have to vote in potentially 1,000 proxy elections! And each vote would be perhaps 2, or maybe 5 shares. That means for just 2 ETFs you hold, you could potentially be hit up with emails asking you to log into your ETF provider and vote on 4 or 5 elections every DAY on average. Do you really think people are going to take the time to vote in 1,000+ elections every single year for just maybe a few shares in each election?

That means a very, very large % of shares are probably not going to be voted to the ETF/Mutual fund companies (While I always vote my shares in my holdings, I honestly wouldn't waste the time to vote the 500 minute partial positions in just my S&P 500 index fund, nor the DOZENS of other ETFs/Mutual Funds I have in various accounts, which would be hundreds more...many of which are duplicated). Which means they spent all that time and money to set up their systems to accept partial voting, when they have to end up voting for a majority of the shares anyway, due to the 2 items above.
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Old 10-10-2016, 04:22 PM   #74
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I think I see the disconnect. I see votable shares for the entire fund. Say a fund has 10,000 shares of IBM stock. The fund might have 100,000 different holders of mutual fund shares, but the vote is still just voting those 10,000 shares. If half of the 100,000 people filled out the survey, then 5,000 shares would be voted based on the fund manager preference. The other 5,000 would be voted based on the preferences of the survey. Yes, it would require some rounding, but if it worked out to voting 4567 shares against some item versus 4568 shares against, I don't think that's something to lose sleep over.

As to being overwhelmed, yes, if you had to consider every vote individually. But the idea was to design a one-time survey that could be used to determine your voting preferences. Yes, some items up for vote may not be covered by the survey, and those items would need to revert to the fund manager. But many of the things getting voted on are fairly predictable and repetitive, so the survey would give a clear indication of voting preferences.
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Old 10-10-2016, 06:04 PM   #75
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Re #74. But to take up the issue raised executive compensation your position might well vary from year to year. The major issues every year are really the directors election, approval of the auditor and recently the exec comp resolution. The share holder proposals unless a big proxy fight is on don't amount to a hill of beans.
Until director elections change from soviet style elections to real elections there really is not much choice there. (It takes a proxy fight to give a choice).
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