The Problem with Index Funds

[james03]

Good article which explains how ESG and DIE just magically popped up:

https://www.zerohedge.com/markets/passive-investor-problem

In 2019, the Harvard Business Review pointed out that "either Blackrock, Vanguard, or State Street is the largest shareholder in 88% of S&P 500 companies." ...

It also means that ideological crusades can be driven by a few investment companies. It's hard to imagine small firms going all in on DEI or ESG investments. What small family company wants to abandon hiring the best job candidates in the name of diversity or adopt unproven "green" practices in the name of sustainability?

But if a few investment managers become passionate about such trendy left-wing ideas they can rapidly disseminate through the market.

Index funds are a nice thing to have for investors saving for retirement.  The fix is simple.  Index funds can not vote on board members, or they must get the investors in the index funds to do the actual voting.

Larry Fink only agrees to buy stocks that make up a particular index for any index fund.  He has not promised any returns or that he is even trying to make a return.  Therefore he doesn't care if Disney loses 50% of its value.  He can vote for woke board members all he wants.

[OzarkCatholic]

I only use index funds.

[james03]

It's a good way to invest because the fees are so low.  They are a good way for people to save for retirement.

However they need to fix this problem of giving so much power to a guy like Larry Fink to direct the policies of companies.  Blackrock should have zero input.  The buyers of the index funds should be the ones who get to vote for directors of the board.

Good example, look at Disney.  The company is imploding, and yet Larry Fink voted to back Bob Iger.  And so the attempted reform was shot down.  This is because Larry Fink doesn't care about Disney.  He only cares about attacking Americans, and Christians world wide.

[Francisco Javier]

Fink and Iger are both Jews btw