Registered investment company fund managers back management proposals far more than shareholder proposals, although the managers consider many factors in how they vote, a new report from the Investment Company Institute shows.
Using proxy voting data for the year ended June 30, 2017, ICI says there is no "one-size-fits-all" description to describe how managers of mutual funds, closed-end funds and exchange-traded funds vote, said Sean Collins, ICI's chief economist, in a news release announcing the report.
"Instead, they consider their voting guidelines and take into account many different factors to ensure their decisions advance shareholders' interests," Mr. Collins said. The average mutual fund voted on about 1,500 separate proxy proposals, according to the report.
Ninety-eight percent of all proposals were sponsored by management for the year, and fund managers voted in favor 94% of the time. Shareholder proposals accounted for the remaining 2% of proposals, and funds voted in favor of those 34.6% of the time.
Among the 7.3 million proxy votes placed based on management proposals, 70.7% involved the election of directors (most uncontested), 13.2% were compensation-related, 9.3% were ratifications of audit firms and 2.7% were "other" management proposals.
In say-on-pay frequency proposals, fund managers strongly supported a vote be held annually, with 82.3% of them supporting it, while 16.2% supported a vote every three years and 1.5% either abstained or voted something else.
Among the fund managers that favored shareholder proposals, 49% voted in favor of shareholder rights or takeover-related votes, 48.9% voted in favor of board structures and election processes, 37% for miscellaneous, 28.4% for compensation-related proposals and 25.2% for social/environmental proposals.
The analysis covers proxy votes cast by 371 managers on behalf of "mutual funds, closed-end funds, exchanged-traded funds, and mutual funds underlying variable annuities, on proposals offered for companies in the Russell 3000 index," the report said.
The report appears on ICI's website.
