Registered investment companies—including mutual funds, closed-end funds, and exchange-traded funds—have dual roles as investors in securities of public companies and as issuers of securities with their own shareholders and boards of directors.
In their role as shareholders in corporations, funds are entitled to vote on proxy proposals put forth by a company’s management or its shareholders. As part of its fiduciary duty to shareholders, a fund’s board of directors, acting on behalf of the fund, is responsible for the voting of proxies relating to the fund’s portfolio securities. A fund’s board typically delegates proxy voting responsibilities to the fund’s investment adviser in recognition that proxy voting is part of the investment management process, but maintains oversight of this function.
In their role as issuers of securities, funds may put forth for shareholder vote proposals on certain corporate matters. In general, open-end funds do not hold annual shareholder meetings; rather, a meeting is held when a shareholder vote on a particular matter is required, such as the election of fund directors or approval of an acquisition or merger. Closed-end funds are required to hold annual shareholder meetings by the rules of the exchange on which the closed-end fund’s shares trade.
This resource center contains the latest news, statements, publications, and policy work around the issue of proxy voting, accessible below and from the menu at left.