Lets play a thought game: Rise in stock market 401k started in early 80s Now IRA introduced in 74 What about mutual funds? Well they got started a long time ago but it was not until the 40s-early50s that they got going good. http://en.wikipedia.org/wiki/Mutual_fund#History So to start this off I will ask a few questions and let it brew in your stomach. Who is voting the individual shares that are pooled in these plans? Who stands to gain the most from your money? Who makes money off of your funds when the market is falling? Do they act in your best interest or theirs? So the companies stopped pensions and gave you savings options that could help them but definitely help someone more than they help you. One more thing: http://en.wikipedia.org/wiki/Proxy_voting I am just saying, you know. Even though they are bound legally that does not mean that they are not acting in their own interest before yours. Sure the funds make money but what if you could vite every share in what you feel is your best interest? Would you vote to outsource or help bring in a CEO that planned on outsourcing? Sure it would make you money in yout 401K -IRA - Mutual fund but could it be your own jod that is proxy voted out of the US by your manager?
What's this CEO business you're talking about? Do you mean the fund manager of the mutal fund? People tend to invest their money in mutal funds because they don't know enough about the market to invest on their own. While some mutal funds do outperform the market, when you factor in management costs and front/back end loads, they tend to do no better than passively managed indexes. Most IRA/401k plans give you the option to invest your money where you want. The corporations offering you the 401ks don't profit off the money you put into it. These plans are typically managed by completely different companies. Pensions are a little different, but even then there are very strict regulations on what they can and cannot invest in (ie investment grade bonds). You're whole post is pretty unclear. What exactly are you asking? When you buy into a mutual fund you're buying into in some cases hundreds of different companies and securities. Having owners of the mutual fund vote on which securities to invest in would be silly. When you buy into a fund you're paying for a professional to make these complicated decisions for you. You're average investor isn't going to know didly squat about how to properly diversifiy a fund within the specific risk requirments and restrictions of a fund.
When you have a 401k, IRA or money market account your individual shares that are held are voted by proxy. You can choose the funds but who votes the actual stock?
As a shareholder you pick someone to vote for you (a proxy), though in many cases you can vote yourself. Why would you have voting rights in a money market account? That's a debt instrument that is an agreement between you and the borrower. You should have ZERO ability to vote on anything in that situation. An IRA is just a tax shelter for retirement funds. An IRA can be invested in almost anything and has nothing to do with voting. And I'm assuming by "votes the actual stock" you mean votes in boardmembers and management decisions, right?
Many people buy stock funds. In those funds actual stocks are purchased are they not? No you buy an actual share in the pool of stocks that are in the fund but who votes the individual stocks that comprise the fund? I asked a question because I could find no solid information. I was actually looking at some stocks and happened to notice some things and went a little deeper and noticed some timing, law and market growth coincidences. I do not believe in coincidences. Call it God, Karma or whatever coincidences like this just do not happen. Who ultimately controls the individual shares and votes. I really wish that chart of the gains was scale because the rise would be almost verticle.
I told you this earlier. You buy into a passive or managed fund. If its passive the stocks are preselected and don't change. If it's managed you pay (through front/back end fees, yearly management fees, or % of the profit) a team of Financial professionals to actively manage the fund and buy and sell stocks based on their analysis. When you buy into the managed fund in the prospectus its outlined that the management makes the decision on which funds to buy. Having each individual fund member vote would be counter-productive....you may as well just do your own thing. Capital allocation is a very complex thing and is used to eliminate systematic risk and maximize returns to risk. The exact mix of stocks/bonds/treasuries etc. that a fund owns is a very exact ratio. Messing with that ratio by allowing a mass of uneducated investors make the decision would definitely hurt returns.
So to be clear the individual stocks in the stock funds do not get voted on by the manager and this is wrong: or am I reading it wrong?
