Is Vanguard Voting Against Your Political Beliefs?

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You’re not supposed to talk about religion or politics in the investment business. Your Survival Guy broke that rule on day one. I’ve always felt it’s important to know who you’re dealing with. The big firms try to play it right down the middle. They try to please everyone and no one at the same time. They don’t talk politics. Until now. And not on purpose. Let me explain.

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When the mutual fund industry rode index fees down to zero, they became victims of their own success. Suddenly, they needed a new way to skin the cat.

Imagine the conference room discussions.

“Bob, we need to get our fees higher,” Frank said.

“I hear you, Frank, but how?” Bob said.

“What if we come up with a product that ‘makes the world a better place’? You know something investors can brag about at cocktail parties, brag about how they’re saving the environment, in a socially acceptable way, with the right government?” Frank said.

“Brilliant! We’ll call it ESG,” Bob said.

And voila.

Leadership became so enamored with their new mousetrap that they decided to vote their shareholders’ shares according to their new ESG religion. And literally, overnight, Blackrock and Vanguard became the king and queen of ESG—voting their politics with your money regardless of what mutual fund you were in—including the mothership index funds.

Your Survival Guy, by law, is required to act as your fiduciary—to act solely in your best interest. So are they. But are they? Through ESG, the king and queen are leading the political charge and going to the bank.

Investors, finally, are waking up to the ESG boondoggle and realizing their money is being voted for things they might not want to support.

Action Line: ESG is a Trojan Horse. It’s a way to collect higher fees. The mutual fund is broken. They’re voting their politics with your money. Investors are waking up. If you aren’t being heard, then vote with your feet. I’m here.

Your Survival Guy (YSG) has been against ESG from the beginning.