![]() ![]() Their business models also rely heavily on recruiting everyday investors away from actively managed mutual funds with the promise of lower fees. With no mission to outperform market indices, the funds lack a financial incentive to ensure that portfolio companies are well-run, Lund said. But the index providers face powerful disincentives in confronting management at the companies in their portfolios, industry experts said. That leaves proxy voting as the primary leverage for index funds firms to hold companies accountable for practices that undermine shareholders’ interests, such as exorbitant executive pay. ![]()
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