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 Empowering Fund Shareholders 


Schwab offers underlying fund shareholders the opportunity to make their voices heard on proxy voting issues.

On October 13, Schwab Asset Management (SAM), the asset management arm of Charles Schwab Corporation, announced that it is the first large asset manager to offer shareholders in three Schwab Funds — the Schwab 1000 Index Fund (SNXFX), the Schwab 1000 Index ETF (SCHK) and the Schwab Ariel ESG ETF (SAEF) – the ability to express their opinions on key proxy issues.

In its announcement, Omar Aguilar, SAM’s CEO and CIO, said “Voting shares of securities held by our funds is a duty Schwab Asset Management takes very seriously. We want to better understand shareholders’ views on important proxy issues, and we know more shareholders want to share their views with us and express their unique preferences through their investments,”

Schwab’s pilot polling program is being run by Broadridge Financial Solutions, Inc. According to the press release, “Broadridge’s new solution aims to provide an efficient and scalable way to gather general preferences across a large base of shareholders… that will provide insights into investors’ priorities on a range of core proxy issues concerning maximizing long-term shareholder value, company policies, corporate governance practices, and environmental and social issues.”

The press release also states that “Schwab’s use of the new polling technology, developed by Broadridge, is another step forward in the democratization of investing…”


While Schwab’s polling initiative is modest in scope (the three Schwab funds account for just 2.1% of Schwab’s $610 billion in assets under management), it is part of what we expect to be a growing trend of allowing index fund investors to actually vote or influence voting on proxy issues. Schwab’s move follows a BlackRock’s initiative earlier this year to allow some of its underlying investors to decide on their own how to vote. In March of 2022, BlackRock made “pass-through” voting available to institutional investors in about 40% of the $4.8 trillion invested in index funds.

The moves by Schwab and BlackRock seem to be in response to the growing pressure on large asset managers who can have an outsized influence on proxy voting matters.

As the big three passive asset managers – Vanguard, BlackRock, and State Street – continue to grow (they currently manage over $22 trillion – the equivalent of more than half of the combined value of all shares for companies in the S&P 500), there has been increased concern and focus on the influence that these firms and others have on proxy voting matters, especially ESG shareholder proposals.

Offloading voting and policy decision-making to the underlying fund shareholders may be a way to allay some of the pressure and concern.

We will continue to monitor this situation and update clients with our observations. 

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Frank is a Senior Vice President in the Investor Intelligence Group at Alliance Advisors and launched the firm's Market Surveillance/Activist Watch programs. As a Chartered Market Technician (CMT), Frank is able to explain the forces that are impacting the client's…

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