Index investors keen on proxy voting: Vanguard

A new survey from Vanguard reveals that investors in passive strategies increasingly want to partake in proxy voting.

Of the total 1347 participants aged 18 and over who took part in the survey, 83% said it is important that asset managers consider investor preferences when casting votes for their funds.

Nearly six in 10 investors (57%) said they would participate in a program that would allow them to influence how their asset manager votes. Only 8% said they would not.

Vanguard global head of investment stewardship John Galloway said the findings reinforce the fact that investors are keen to make their voices heard and are looking for asset managers that will empower them to engage in the proxy voting process.

Despite the importance of proxy voting, Galloway said the critical role it plays in corporate governance, and the transparency regarding their voting record that asset managers deliver via regular disclosure, many investors aren't aware of the process.

Less than half of investors (47%) know that investment managers cast proxy votes on behalf of their investment funds.

Younger investors aged 44 or younger report even less awareness, with only one third (36%) familiar with proxy voting.

Beyond the strong interest in participating in proxy voting choice programs, more than half of investors (58%) also noted that they would be more likely to invest in a fund that offers the ability to influence its proxy voting decisions.

Many investors (86%) might consider switching investment firms altogether for the ability to influence proxy voting.

"At Vanguard, we believe long-term shareholders - including index fund investors - play a critical role in a healthy corporate governance ecosystem," Galloway said.

"Proxy voting is central to effective corporate governance, and a fundamental right of ownership.

Whether voted by investors who directly own shares in a company, or by an investment manager who invests in the company on behalf of others, proxy votes allow shareholders to support governance standards in the manner they believe will protect and maximise shareholder returns."