Who reads proxy statements? You get them in the mail, loaded with legese, and you normally don’t care. At least I don’t. Today I got one which for giggles I decided to read through.
ETFs are simple: they are pegged against an index (eg S&P 500 or Spain’s Bovespa). The invest money in the companies comprising that index and if it goes up you win, down you lose. They have little overhead because they are managed by computer programs and not a person. There are very few ifs and buts.
I have iShares ETFs. Not many but it every bit counts. Dummy-proof and cheap for lazy folks. iShares is being sold to Blackrock. Fine. What’s not fine is that in the proxy statement they mention an opaque “change of investment goals from fundamental to non-fundamental”.
Reading deeper, I found the meaning: a fundamental investment goal is one that cannot be changed unless all shareholders are notified. For an ETF that seems to me like should be the case. As a plain index investment tool there no need for change and if it happens, I want to know about it. Non-fundamental goals only require board of directors approval. If the board of directors for the fund feels like it, the can change the goal of investing in, say Korea to investing Lesotho. That’s how it looks to me. The only motivation mentioned is that Blackrock, as the new fund manger, wants ‘condistency’ and less mailings, which cost shareholders. As a shareholder I want to know, all the more if you change what are really, my goals.
So I feel like actually returning the proxy vote card. Doubt it will have an effect. But at least I am reacting. Voting. Look into it, maybe you should do the same.
2 replies on “Got iShares ETF? Read this!”
I am a stone’s throw away from a financial investment firm in the Philly suburbs. So, when I hear news about the local company is looking to sell it’s ETF line that falls under the iShares brand. Speculation has already begun. In addition to the some private equity groups other big industry names are being batted around as potential buyers. Doubts about iShares ETF spreading out globally that is why I am returning the proxy vote card. as like as you did yuval.
Well, it appears that enough shareholders, like me, appear to have not voted. I’ve been getting multiple reminders – even an overnight UPS delivery encouraging me to vote. I’m not a large shareholder, just a few thousand shares spread across 3 ETFs.
I always vote my shares in proxy statements, but not this time.
Why? Well, my vote can’t do much either way, but if they can’t achieve a “quorum” of votes, then no business can be performed. I’m not interested in their changes, that’s way I’m withholding any response.
Got another “important notice” today, which will be ignored.