Dive Brief:
- Vanguard will expand its program allowing investors to choose individualized investment and engagement policies to four more funds in the second half of 2025, the company announced last week.
- The nation’s second-largest asset manager said the program will include four index funds, allowing nearly 10 million investors to participate if they so choose, according to a May 29 release. The expansion will “nearly quadruple” the assets under management to nearly $1 trillion in program eligible funds and bring the total number of funds eligible funds to 12.
- The program’s expansion comes after an April Vanguard survey of more than 1,000 investors found 83% of respondents believed it was important for asset managers to consider investor preference when casting proxy votes, and 57% of respondents expressing interest in participating in proxy choice programs.
Dive Insight:
Vanguard first launched its proxy voting choice pilot in February 2023 with three eligible equity funds, before including two additional index funds for the 2024 proxy season and adding three more in November to bring the total to eight eligible funds. The program gives participating investors five different policy options, allowing participants to align their votes with company boards, Vanguard’s recommendations, Glass Lewis’ ESG policy, a “wealth-focused” anti-ESG policy from Egan-Jones or vote in proportion with other shareholders.
Vanguard expanded its policy options for the 2025 proxy season to give investors the Egan-Jones policy option and replaced a former “not voting” with the mirror voting policy. Additionally, November’s expansion was the first time that retirement plan sponsors were allowed to participate if they have program eligible funds in their portfolio.
Vanguard’s Global Head of Investment Stewardship John Galloway said in last week’s release that the program’s continued expansion “underscores [Vanguard’s] confidence that a range of independent perspectives contributes to a healthy corporate governance ecosystem and well-functioning capital markets.”
The expansion will add Vanguard’s Value Index Fund, Growth Index Fund, Mid-Cap Index Fund and Large-Cap Index Fund to the program.
The May 29 program expansion will also broaden its eligibility to 529 plan sponsors, according to the release. Two-thirds of investors who participated in Vanguard’s April study (66%) said they would opt in to such a program if offered by their employer’s retirement plan.
However, the expanded eligibility does not guarantee expanded participation.The asset manager reported having 40,000 participants in the program after the 2024 proxy season, which Morningstar Sustainalytics’ Director of Investment Stewardship Research Lindsey Stewart said at the time was a “decent start,” but “not a large proportion” of Vanguard’s investors.
Last September, Vanguard reported a plurality of participants — 43% — aligned their voting policy with the asset manager’s recommendations in the 2024 proxy season and another 30% aligned their votes with company board recommendations. Under a quarter of participants (24.4%) chose the Glass Lewis ESG policy.
