By Ross Kerber
State Street Corp will offer retail fund investors proxy voting choices, the firm said on Monday, moving ahead of rivals with a strategy that could blunt criticism of index funds' environmental, social and governance (ESG) policies.
By the end of 2024, the firm's asset-management arm, State Street Global Advisors, aims to allow investors in $1.5 trillion worth of its index equity assets to influence how their proxy votes will be cast at corporate annual meetings.
Investors in products including exchange-traded funds will chose among various voting policies offered by Institutional Shareholder Services. While they will not be able to control how votes are cast on individual directors or other specific ballot items, the guidance broadens an earlier effort State Street created to give institutional investors more say.
Other big index fund providers BlackRock Inc and Vanguard Group are also moving to give their clients more control, though not yet to as many individual investors.
Together the three firms manage some $20 trillion. Their influential votes have drawn much criticism, both from activists urging them to push portfolio companies harder on issues such as climate change or workforce diversity and, this year, from right-wing U.S. politicians who say the firms focus too much on ESG matters.
Giving away voting rights could blunt the criticism and distinguish State Street products. Voting choices will be "yet another innovation that amplifies our ongoing mission to democratize investing," said Yie-Hsin Hung, CEO of State Street Global Advisors.
State Street aims to offer individual voting for funds including the SPDR S&P Dividend ETF, and targets November for certain products.
Investors in funds including one of the firm's best-known, the SPDR S&P 500 ETF, will not have access to the voting option because of their unit investment trust structure, a State Street representative said.
(Reporting by Ross Kerber in Iowa City; Editing by Jacqueline Wong)
