I received in the mail a booklet from Vanguard. They are asking me to vote on some proposals they put in front of the shareholders. I actually read the booklet. Here’s how I’m going to vote.
Proposal 1 – Elect Trustees for Each Fund. I have nothing against the trustees. I don’t know exactly what they did but the funds are doing alright. I’m going to vote for all of them.
Proposal 2 – Update and Standardize the Funds’ Fundamental Policies. Each mutual fund is actually a separate legal entity. It has its own policies. Vanguard wants to adopt a set of policies that apply consistently to all the funds. This way they don’t have to worry about the minor differences in different funds. I like simplicity and consistency. But the proposed new policies all go toward the lowest common denominator. They impose the least restriction. Basically as long as it’s legal, the funds are permitted to do it. That’s not cool. Other than inconsistency, I don’t see how the funds have been limited by the policies currently in place. I don’t see any good reason to relax the policies. If Vanguard had gone to the most restrictive policy, I would vote for the proposal. This proposal has seven sub-proposals:
Proposal 2a – Purchasing and selling real estate. I’m voting against it.
Proposal 2b – Issuing senior securities. I’m voting against it.
Proposal 2c – Borrowing money. I’m voting against it.
Proposal 2d – Making loans. I’m voting against it.
Proposal 2e – Purchasing and selling commodities. I’m voting against it.
Proposal 2f – Concentrating investments in a particular industry or group of industries. I’m voting for this sub-proposal because some Vanguard funds are sector funds and they need to concentrate in some industries and because this sub-proposal didn’t leave any backdoor like "except permitted by law."
Proposal 2g – Elimination of outdated fundamental policies not required by law. I’m voting against it. Those policies may not be required by law but they are still good safeguards. I’m not ready to ditch them just because they are not required by law.
Proposal 3 – [paraphrasing] Do not invest in companies that substantially contribute to genocide or crimes against humanity. I’m voting against this proposal, not because I support genocide or crimes against humanity, but because I believe this should be handled at the investor level, not at the mutual fund level. If an investor wants to invest in a socially responsible fund, he or she can choose one from many socially responsible funds on the market. If an investor doesn’t want to invest in a specific company in a fund’s portfolio, he or she can short that company.