World index asset managers without agenda

[kevin247]

If you'd want to invest in a world index via ETF or fund but wouldn't want to park your money at asset managers using their voting power to push agenda's such as ESG/DEI/Woke/Genders/Rainbows/Unicorns/etc how would you go about it?

"The three largest passive asset managers (Blackrock, State Street, Vanguard) control more than $20 trillion and vote nearly one-quarter of all shares cast at corporate annual meetings to support social agendas disfavored by many Americans whose money they manage." source

Florida pulling 2 billion out of BlackRock

I came across Strive Asset Management for example but it doesn't seem they've UCITS type ETFs.

Additionally I read that HSBC (an alternative I considered) fired a top-manager who didn't follow their stance on climate change and they put up billboards in the UK pushing DEI agenda.

EDIT: It seems this is a sensitive topic, apparently I'm a far right extremist by saying this. TLDR: I'm just looking for asset managers who stay clear of any political matters and don't use their voting rights coming forth from index funds!

"Index fund providers have come under fire from both left and right over their influence on US companies" source (FT)

EDIT 2: I found a related thread in a different subreddit which mentions possibilities of ETFs with proxy-voting

EDIT 3: I found one helpful answer here: "It is no secret that the financial industry moves at a glacial pace. Academics started advocating for pass-through voting back in 1980, and yet the first pass-through vote was not placed until BlackRock’s Voting Choice was launched in 2021, a full 41 years later. But change is coming. On top of the proposed INDEX Act in the U.S. which, if passed, would require passive fund managers to solicit investors’ voting preferences, the biggest three fund managers – BlackRock, Vanguard, and State Street – have begun offering pass-through voting. In the UK, CIRCA5000 in partnership with Tumelo recently launched the first suite of ETFs that offer pass-through voting. Institutional investors, in the U.S. especially, have also begun to request pass-through voting from their fund managers."

 

[resjudicata]

@kevin247 who does not have an agenda is the question ? The answer : No One. Everyone has an Agenda, especially when it comes to money.

 

[kevin247]

@resjudicata This use of voting rights is a new phenomenon due to the rise of ETF popularity and the funds ending up at a handful of asset managers who are now behaving like activist investors.

I'm looking for the managers which don't make use of their voting power originating from index funds, stay clear of political matters and just be boringly neutral like it always has been.

 

[clusium]

@kevin247 Can you substantiate your claims or accusations , let’s say, against Vanguard? They have a very public investment stewardship program: https://corporate.vanguard.com/cont...ves-and-commentary/about_our_program_2023.pdf

Florida pulling their investment in ESG is a good political stunt, but I actually happen to agree that current ESG approach is bad.

In terms of climate change, any long term investor disregarding it would be gross negligence to their fund holders. HSBC would be right to fire the person responsible for responsible investment for such comments. You might think it’s a scam, but even if it were so, no one with fiduciary duties can act on that assumption.

Maybe there should be a fund buying assets undervalued because of the climate “hoax”, but the lack of it is a signal.

 

[kevin247]

@clusium Based on the ESG proxy vote ranking by WSJ it seems Dimensional and Vanguard are the least worrisome. The main issue however is that they're using the voting power from index funds in the first place. I'm looking for asset managers who are boring and stay clear of politics, ie casting no votes at all (abstain) and just focus on managing the funds. Just like the "old" days which aren't that far in the past actually.

Nice article relating to Vanguard: "Vanguard said in a statement: “Our clients have diverse perspectives and a growing number would like the option to weigh in on how their index funds vote on important proxy questions at the companies held in the funds.” ... The news follows a chorus of critics raising concerns that the biggest issuers of index-tracking products – BlackRock, Vanguard and State Street Global Advisors – wield too much influence through the growing assets flowing into passive products and the resulting increase in ownership of individual companies.

In February, Berkshire Hathaway vice chairman Charlie Munger said the ‘Big Three’ are creating a new centre of ownership, with power over the votes attached to trillions of dollars of index fund assets creating “a new bunch of emperors”.

This was followed by Tesla founder and CEO Elon Musk who said in April: “Passive has gone too far. Decisions are being made on behalf of actual shareholders that are contrary to their interests.”"

 

[sdd2174]

@kevin247 I like watching woke content. Therefore if companies profit from releasing it, it’s just the market doing its thing.

Or are right wingers now anti free market?

 

[ieltasap]

@sdd2174 Well since a lot of them flirt with people like Putin, I’d say the far right is pretty much a track back to autocratic anti-free market principles.

 

[walkbyfaithnotbysight]

@kevin247 Think of what you are asking. G means governance. So, you want ETF that only includes companies with bad governance, where they don't fight insider trading, market manipulation, fraud etc etc?

Moreover, funds without classic "ESG" have different agenda. Conservative agenda, which can also hurt returns. For example, fines for hurting environment from government can be huge. Also, relying on fossil fuels means dead-end, and such company is doomed in the long-term. Again, not very good for returns.

And the last thing: ESG is often only marketing term and is on paper. In reality, managers still put money where they earn more. Research confirms it.

 

[kevin247]

@walkbyfaithnotbysight You can freely choose funds with or without ESG policies. The problem I'm outlining is that the large asset managers use their votes at annual meetings to push for agenda's like ESG. Of every index fund you're buying the manager receives all the voting rights, regardless of how the fund is classified. Their agenda like activist investors but with your money.

I'm looking for index managers who don't involve themselves in voting at all, be neutral and just focus on managing the money, I'm sure there must be many out there.

 

[walkbyfaithnotbysight]

@kevin247 Fund managers have fiduciary duty to fund clients. If they think their actions can earn money or prevent loosing it, they must act by law. (Not a legal advice).

 

[gemsqaush]

@kevin247 It is not possible with ETF's since they hold a lot of different stock.

Buy single stock in lets say oil and sellf defense stock to avoid communist management.

 

[aperson123]

@kevin247 Some libs in the comments literally defending the worst side of modern capitalism lmao

 

[kevin247]

@aperson123 I seemed to have stepped on a lot of people's toes, but all I'm looking for are asset managers who stay neutral / clear of political matters as it practically always has been.

This misuse of voting powers is a relatively new development as a result of ETF popularity in the hands of a select few asset managers.

 

[sonofmatthew]

@kevin247 actually there is a simple solution.

just invest in passive funds.

passive ETFs just track an index as closely as possible, the index is often defined by a different company, and the methodology is disclosed. this makes it near impossible for the issuer of the ETF to push any type of agenda.... as they would have to somehow incorporate their agenda in the index definition metodology.... but at that point people could more easily notice they are doing that

A fund like VWCE is pretty neutral from that point of view, so it is an S&P500 etf, or anything that tracks similar indices like the the MSCI World index, Dow Jones Industrial Average, or the NASDAQ

 

[scottcuster]

@sonofmatthew That's not how most ETFs work.

Your argument might be valid for those with synthetic (swap based) replication, good suggestion actually.

However, most ETFs hold shares of some or all of the companies in the index they're following. Holding shares means voting rights. Especially the large providers such as Vanguard and BlackRock hold a considerable % of many companies, and their votes matter.

In any case, from all I've read they may say they're focused on voting for "sustainable" goals but they don't actually do that.

 

[kevin247]

@scottcuster Yes this is what I was referring to. Do you've more information on synthetics in this regard, there's no (in)direct voting rights associated with money invested in such vehicles? Thank you in advance

 

[shellyslioneyes]

@kevin247 I don’t follow you. You’re saying you refuse to invest in ETFs managed by these companies because they have an “agenda”?

Afaik, Vanguard has only one ESG-focused ETF, namely V3AA/V3AL but you personally are not obliged to throw your money on it. You can buy non-ESG ETF from said providers and that’s it. Or go full into Dow Jones which in my opinion is the most non-ESG index.

But keep in mind that you also have an agenda - to make money on the long term. Everybody has an agenda and as long as Vanguard, Blackrock or anybody else provides a fund which can fulfill my goals, what’s the problem?

Let’s take the Apple example. If Tim Cook is gay and I am straight, should I short Apple just because of that? Of course not, we’re in for the common good/interests and I don’t care about the CEO’s private life or principles.

You should be as rational as possible when it comes to money. Do not let misconceptions or stereotypes to influence your financial decisions.

 

[kevin247]

@shellyslioneyes So when you buy an ETF, whether it has an ESG policy or not, the voting rights go to the asset managers. At the annual meetings they still use these votes to push for political agenda's, whether you invested in an ESG fund or not. They're technically behaving like activist investors without your consent.

I'm looking for managers who don't involve themselves in political matters and just focus on managing the funds - buying the stocks, rebalancing, etc.

 

[lailah]

@kevin247 Make your own tracker

 

[kevin247]

@lailah Would it be possible? And with automatic rebalancing?