EnsilZah
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- 8/9/17
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So I've just read this article.
https://www.wsj.com/articles/bogle-sounds-a-warning-on-index-funds-1543504551
(You can prepend "http://facebook.com/l.php?u=" to circumvent the paywal)
It brings up an interesting point, that as more of the market is owned by funds, they also control voting rights in the companies.
If I understand correctly, currently these funds have boards that determine what's best for the holders and vote accordingly, but those votes may not be optimal for the individual companies themselves, you may have conservative decisions that lead to stagnation.
The thought has crossed my mind that these funds might open some sort of website that allows you to vote based on the amount you have invested in the fund, but it would probably be pretty useless, the number of people who'd actively vote on every constituent company in the fund would probably be negligible, if the fund's votes were based solely on these there would be a strong bias for activist voters, and if the fund used a default predetermined vote for anyone who doesn't vote then any active voters would be drowned out.
Anyway, I guess one way of looking at index fund investment as something similar to Marx's 'ownership of the means of production', though I haven't actually read the original text, so I assume there are nuances I'm missing.
But it appears it's only partial ownership, in the sense that you get to reap the dividend, but not make any actual decisions.
Also, presumably there's some selection here, where funds can invest only in older established companies, while real innovation can come from startups, private companies, etc.
I guess as the average passive investor you might expect generally lower risk/reward in the future, but also as an active investor in the same companies.
Thoughts?
https://www.wsj.com/articles/bogle-sounds-a-warning-on-index-funds-1543504551
(You can prepend "http://facebook.com/l.php?u=" to circumvent the paywal)
It brings up an interesting point, that as more of the market is owned by funds, they also control voting rights in the companies.
If I understand correctly, currently these funds have boards that determine what's best for the holders and vote accordingly, but those votes may not be optimal for the individual companies themselves, you may have conservative decisions that lead to stagnation.
The thought has crossed my mind that these funds might open some sort of website that allows you to vote based on the amount you have invested in the fund, but it would probably be pretty useless, the number of people who'd actively vote on every constituent company in the fund would probably be negligible, if the fund's votes were based solely on these there would be a strong bias for activist voters, and if the fund used a default predetermined vote for anyone who doesn't vote then any active voters would be drowned out.
Anyway, I guess one way of looking at index fund investment as something similar to Marx's 'ownership of the means of production', though I haven't actually read the original text, so I assume there are nuances I'm missing.
But it appears it's only partial ownership, in the sense that you get to reap the dividend, but not make any actual decisions.
Also, presumably there's some selection here, where funds can invest only in older established companies, while real innovation can come from startups, private companies, etc.
I guess as the average passive investor you might expect generally lower risk/reward in the future, but also as an active investor in the same companies.
Thoughts?
