Vanguard Investor Choice
Empowering everyday investors through voting choice
“As a company with a long history of reducing barriers for everyday investors, Vanguard Investor Choice continues this commitment, empowering individual investors to participate more directly in the proxy voting process for their mutual fund and ETF shares.”
John Galloway
Global Head of Investment Stewardship
- About
- How it works
- Policy options
- How our funds voted
About Investor Choice
More than 50 million individual investors entrust Vanguard to help them save for objectives such as retirement, a home purchase, a child’s education, or simply financial peace of mind.1 The money that Vanguard manages belongs to those investors, and we take our responsibility to them seriously.
In 2023, Vanguard launched the Investor Choice pilot program, giving individual investors the ability to express their perspective on shareholder matters at the companies held in their equity index funds. With Investor Choice, Vanguard is enabling equity index fund investors to choose a proxy voting policy option aligned with their preferences. An investor’s policy selection directs how their proportionate share of portfolio company holdings is voted at the shareholder meetings included in each pilot.2 Vanguard Investor Choice allows those investors who choose to participate to select from a menu of voting policy options that reflect a broad range of approaches to proxy voting.
Our pilot program has given investors in funds representing over $100 billion in assets the opportunity to help direct how their equity index funds vote at company shareholder meetings. Vanguard will continue expanding Investor Choice in the future through pilot programs for investors in additional equity index funds.
1 As of December 31, 2023.
2 Vanguard will rely on the share ownership information provided by an investor’s broker or custodian in its calculations. Due to rounding or other factors, the proportionate share of portfolio company shares that are voted according to a Pilot Fund shareholder’s policy selection may not always exactly match that shareholder’s proportionate ownership. Additionally, shares of a security that are on loan pursuant to Vanguard’s securities lending activities or shares that are subject to vote restrictions or ownership limitations could impact the total number of shares available for the fund to vote. In such cases, an investor’s proportionate share will be calculated utilizing the number of shares eligible to be voted by the fund after excluding shares on loan or subject to such voting restrictions and ownership limitations.
How the pilot works
Vanguard Investor Choice gives investors the opportunity to participate more directly in the proxy voting process for the funds they hold by selecting from a range of proxy voting policy options.
Proxy voting basics
Publicly traded companies hold shareholder meetings at which matters may be presented for a shareholder vote.
A wide spectrum of matters may be presented for a shareholder vote, but the most common include the election of the company’s directors, the ratification of the company’s independent auditor, and an advisory vote on executive compensation. Company management may have other proposals on the ballot, including (but not limited to) changes to the company’s capital structure or amendments to the company’s corporate charter and bylaws. Other shareholders may have submitted proposals on a wide variety of matters as well. Learn more about the basics of proxy voting.
Individuals who directly own stocks in a public company receive proxy ballots and can express their preferences on items raised at that company’s shareholder meetings. With Investor Choice, Vanguard is providing a way for index fund investors to help direct how their index fund votes the proxy ballots the fund receives for companies it holds.
About Investor Choice
Vanguard Investor Choice is designed to enable investors in equity index funds to participate in the voting process by selecting from a menu of voting policy options that reflect a range of preferences regarding approaches to proxy voting. Participating investors’ proportionate share of the fund is then voted according to the policy they selected. Investor Choice fact sheet
Why votes matter
Investors’ participation in Vanguard Investor Choice helps direct how their equity index funds vote at shareholder meetings included in the pilot, through selection of a voting policy option that aligns with investors’ personal views regarding proxy voting matters. Vanguard is giving investors in equity index funds the opportunity to direct how their proportionate fund ownership is voted at shareholder meetings.
How to participate
Investors eligible to participate in Vanguard Investor Choice based on their fund holdings will be invited to do so. Eligible investors may receive an invitation based on their communication delivery method preference on record with their broker or custodian. Vanguard will continue to provide updates on upcoming pilots as we expand the pilot program to additional funds and new investors.
Policy options
Vanguard offers eligible investors the opportunity to select from a range of policy options that are designed to meet the preferences of our investors. The voting policy menu seeks to offer a distinct set of mechanical and discretionary options that reflect varying perspectives on preferred proxy voting outcomes.1,2 The voting policy options that were available for the 2024 pilot are shown below. If an investor elected not to participate in the pilot program, the fund continued to vote that investor’s proportionate ownership of the fund based on the Vanguard-Advised Funds Policy.
Vanguard Investor Choice policy options
Company Board-Aligned Policy
The Company Board-Aligned Policy will vote the proportionate shares of participating investors in accordance with the recommendations on each proposal made by the portfolio company’s board of directors pursuant to each company board’s fiduciary duty to act in the best interests of company shareholders.
“Not Voting” Policy
The “Not Voting” Policy will leave the proportionate shares of participating investors unvoted on all proposals.
ESG Policy by Glass Lewis
The ESG Policy will vote the proportionate shares of participating investors in accordance with proxy voting recommendations from Glass Lewis’s thematic Environmental, Social & Governance (ESG) Voting Policy which are consistent with a view that investment returns can be enhanced through a focus on disclosing and mitigating risks related to environmental, social, and governance issues.
Vanguard-Advised Funds Policy
The Vanguard-Advised Funds Policy, which is administered by Vanguard Investment Stewardship, will vote the proportionate shares of participating investors in accordance with the guidelines adopted by each fund’s board and in a manner that seeks to maximize long-term shareholder returns by focusing on principles of good corporate governance.
1 In contrast to the “discretionary” policy options outlined below, two of the policy options available to investors (Company Board-Aligned Policy and "Not Voting" Policy) are executed based on a defined (or “mechanical”) instruction that does not involve any discretion. Each policy allows an investor to know in advance how their pro-rata shares would be voted under the policy.
2 Unlike the ”mechanical” policy options outlined above, two of the policy options available to investors (ESG Policy by Glass Lewis and Vanguard-Advised Funds Policy) are executed based on defined guidelines that reflect different approaches and perspectives on what proxy voting outcomes best support investors’ objectives. Given the subjective and nuanced nature of many issues on shareholder ballots, the application of these policies is subject to the discretion or judgment of the team or organization responsible for executing the policy. As a result, there may be some variation between an investor’s expectation or how a policy would be applied and particular vote outcomes. That said, the policy options included for the pilot program have been selected after consideration of the clarity and completeness of the underlying written policy guidelines, and the track record of consistency between the guidelines and past voting outcomes.
How the funds voted
Investors who participated in the pilot program helped direct how their equity index funds voted at select company shareholder meetings during the pilot period. Details of proxy votes cast by the funds included within the Vanguard Investor Choice can be found here.
Details of proxy votes cast by all Vanguard funds are available for the proxy year ended June 30, 2024.
Important information:
All investing is subject to risk, including the possible loss of the money you invest.
For more information about Vanguard funds, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
ESG funds are subject to ESG investment risk, which is the chance that the stocks or bonds screened by the index provider or advisor, as applicable, for ESG criteria generally will underperform the market as a whole or, in the aggregate, will trail returns of other funds screened for ESG criteria. The index provider or advisor's assessment of a company, based on the company's level of involvement in a particular industry or their own ESG criteria, may differ from that of other funds or an investor's assessment of such company. As a result, the companies deemed eligible by the index provider or advisor may not reflect the beliefs and values of any particular investor and may not exhibit positive or favorable ESG characteristics. The evaluation of companies for ESG screening or integration is dependent on the timely and accurate reporting of ESG data by the companies. Successful application of the screens will depend on the index provider or advisor's proper identification and analysis of ESG data. The advisor may not be successful in assessing and identifying companies that have or will have a positive impact or support a given position. In some circumstances, companies could ultimately have a negative or no impact or support of a given position.
