Tens of millions of investors put money into index funds, which now total tens of trillions of dollars.
An unintended consequence is that the managers of these index funds wield immense power over corporate America. They get to vote these shares, thereby influencing the make-up of boards of directors and the policies they pursue. The top three index fund firms are the largest shareholders in more than 90% of the companies in the S&P Index.
Individual shareholders are powerless. It’s their money, but the index managers control how their shares are voted.
This segment of What’s Ahead focuses on a proposed piece of congressional legislation, dubbed the INDEX (Investor Democracy is Expected) Act, that would rectify this problem of undeserved power by giving voting rights to individual shareholders.