Investing Blog Roundup: Vanguard Expands “Vanguard Investor Choice” Program

When you own shares of a business, as a partial owner, you have the right to vote on how the business will respond to various important issues facing the company. You are a part of the business’s governance. You have influence.

When you own mutual funds though, your stock ownership is indirect. You own shares of a mutual fund, which owns shares of various companies. And when that’s the case, it’s the fund management (rather than you, the fund shareholder) that gets to vote the various shares that the fund holds. As fund shareholders, we have largely abdicated our our corporate governance rights and responsibilities.

This issue isn’t new. (Here’s a 2002 letter from Jack Bogle to the SEC, voicing his concerns on the topic, for example.) But as indirect ownership of stocks (via mutual funds) has been growing steadily for several decades, the issue becomes increasingly important each year.

Fortunately, some fund companies have been responding by creating systems that allow their shareholders to indicate, at a broad level, how they would like their portion of shares to be voted.

Vanguard has been gradually rolling out their program (“Vanguard Investor Choice”) since 2023. And they just announced that they’re adding more funds to the program (including all share classes of the Vanguard 500 Index Fund/ETF), which will collectively triple the assets eligible to participate in the program.