Sage Advisory Services has published its annual ETF Stewardship Report, explains that this refers to the responsibility that ETF providers have to act in the best interests of their investors.
“ETF providers have amassed substantial voting power due to the size of their holdings, which are often significant portions of many major corporations. How these firms choose to engage with company management and vote on issues, such as executive compensation, board composition, and shareholder rights and protections, is crucial for shaping corporate behaviour and, for investors, financial outcomes,” the firm says.
For this report, Sage reports that it engaged with 20+ ETF issuers, including some of the largest firms in the space.
Key findings include:
A continued decline in the level of transparency being provided by participating firms;
More ETF providers are providing investors with a voice in proxy voting decisions rather than highlighting the benefits of their stewardship teams making well-informed choices to drive positive outcomes;
What Sage sees as a reduction in the quality and depth of stewardship services being exercised on behalf of investors at a growing number of ETF management firms.
The report further discusses why so many ETF managers are taking a defensive approach, what the fallout from this might be, and why Sage believes these trends, if left unabated, “will ultimately work against the interest of the average investor and the goal of building long-term capital value.”
The report can be found here.
