July 26, 2018
What do the vast majority of individual investors hope for when tucking away a portion of their paychecks every month into their pension funds or 401(k)? To have those investments perform well enough that they can live comfortably later in life – that their investment is maximized. This is a key agenda item for the the Main Street Investors Coalition (MSIC), which seeks to draw attention to institutional investor’s increasing focus on politically motivated investing, instead of working to maximize profits.
And yet, a recent column in the New York Times tries to make out the interests of our group and retail investors to be diametrically opposed, stating that because we are funded by a coalition of business associations we have “nothing to do with mom-and-pop investors.” In fact, attempts by Nan Bauroth, a member of the MSIC Advisory Committee and retail investor herself, to reach Mr. Sorkin and discuss the group’s commitment to returning power to individual shareholders were repeatedly ignored. Instead, Mr. Sorkin made up his own conclusions about the group’s intentions.
Indeed, a recent study found that 92 percent of pension fund members from across the country consider a fund’s ability to generate returns “at or above a fund’s target level to be important or very important.” Further, the study found that 93 percent of fund members considered generating returns at or above overall market performance as important or very important.
Since we launched, our mission has always been to promote these same interests – to minimize the politicization of the investment process by any group, not just large institutional investors by empowering individual shareholders. As the New York Time’s article notes:
“Among the organization’s goals is a way for retail investors to provide voting instructions to the firms that hold their investments. In effect, rather than voting on behalf of all the investors in a given fund, BlackRock would have to parcel out the votes based on each investor’s wishes.”
The article continues, noting the impact this retail investor empowerment would have:
“That sounds good theoretically, but it could erode the ability of the fund’s managers to push for big-picture changes on behalf of the many investors who are unlikely to take a position — or, frankly, aren’t steeped enough in the issues to make an informed decision.”
Despite the author’s condescending suggestion that Main Street investors aren’t knowledgeable enough to make decisions, a point we strongly disagree with, Mr. Sorkin admits that our solutions “sound good,” and also acknowledges that our agenda would accomplish exactly what many individual investors are looking for – taking away a fund manager’s ability to “push for big-picture changes” when those changes have not explicitly been approved by investors.
The MSIC continues to believe that a clear crossover exists between the interests of this coalition and retail investors, despite Mr. Sorkin pushing an “us-against-them” dynamic. It’s as though the author believes this is some secret – it’s not, and clearly stated in our op-eds, interviews and on our website – and that it somehow delegitimizes our ability to push for the solutions that benefit both individual investors and American businesses. The author’s tone and attempts to “expose” our coalition ultimately expose his lack of understanding for what individual investors truly want: a greater emphasis on returns, not a political agenda.