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Financial management

Empowering everyday investors through proxy voting choice

Vanguard begins proxy voting pilot for investors in select index funds.
2 minute read
February 01, 2023
Financial management
Company news
Vanguard news

Vanguard begins proxy voting pilot for investors in select index funds

As a part of a new pilot program, investors in three Vanguard equity index funds now have choices to participate more directly in the proxy voting process.

Investors who directly own stocks in a public company can already make their voice heard by voting on a range of matters raised at company shareholder meetings. These matters may include the election of the company’s directors, the ratification of the company’s independent auditor, and votes on executive compensation. There may also be proposals submitted by company management and other shareholders on a wide variety of matters.

Now, Vanguard is advancing ways to give investors options to direct how their index funds vote as well.

Beginning February 1, 2023, and running through June 30, 2023, investors in the Vanguard S&P 500 Growth Index Fund, the Vanguard Russell 1000 Index Fund, and the Vanguard ESG U.S. Stock ETF will be able to select from four different proxy voting policy options. By participating in this voluntary pilot, investors will be able to direct how the fund votes on ballot items for certain of the fund’s largest holdings, proportionate to their ownership in that fund.

Whether held through Vanguard directly or as part of a portfolio held with another firm, eligible investors in these funds will soon receive an invitation to a secure website where they can select a proxy voting policy.

Another way Vanguard is putting investors at the center of all we do

Vanguard is on a mission to empower everyday investors and help them achieve their long-term financial goals. Exploring ways to provide investors with proxy voting choice is a continuation of Vanguard’s effort to give individuals the information and options they need to help ensure that their investment portfolios reflect their investment goals and preferences.

“Piloting proxy voting choices is yet another way Vanguard is working to provide our investors with a wide range of options to meet their individual goals and personal preferences,” said Anne Robinson, Vanguard’s General Counsel and Corporate Secretary. “In this endeavor, we are committed to listening and gathering feedback as we explore ways to further support our clients.”

As an investor-owned asset manager1, Vanguard is uniquely positioned to partner with individual investors on participation in the proxy voting process. We are committed to exploring the full range of options and working with all relevant stakeholders with respect to proxy voting choices for index fund investors.

This proxy voting choice pilot program will help Vanguard identify the most efficient and effective mechanisms for enabling investors to express their views in the proxy voting process. On proxy voting choice, as on all matters, Vanguard will be guided by our mission to take a stand for all investors, to treat them fairly, and to give them the best chance for investment success.

All investing is subject to risk, including the possible loss of the money you invest.

1Vanguard is investor-owned, meaning the fund shareholders own the funds, which in turn own Vanguard.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

ESG funds are subject to ESG investment risk, which is the chance that the stocks or bonds screened by the index provider or advisor, as applicable, for ESG criteria generally will underperform the market as a whole or, in the aggregate, will trail returns of other funds screened for ESG criteria. The index provider or advisor's assessment of a company, based on the company's level of involvement in a particular industry or their own ESG criteria, may differ from that of other funds or an investor's assessment of such company. As a result, the companies deemed eligible by the index provider or advisor may not reflect the beliefs and values of any particular investor and may not exhibit positive or favorable ESG characteristics. The evaluation of companies for ESG screening or integration is dependent on the timely and accurate reporting of ESG data by the companies. Successful application of the screens will depend on the index provider or advisor's proper identification and analysis of ESG data. The advisor may not be successful in assessing and identifying companies that have or will have a positive impact or support a given position. In some circumstances, companies could ultimately have a negative or no impact or support of a given position.

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