Wednesday, 2 July 2008

Investor suffrage

Now this looks like a really interesting idea, and one that could fit in well with the DB to DC shift in the UK and a number of other countries. The blurb below explain the idea (for mutual fund read unit trust in the UK):

Imagine you invest in a mutual fund. The fund has always voted the shares it holds on your behalf, but today it offers you a choice. You can have the fund continue to vote the shares, or the proxy rights can be transferred to a third party of your choosing—perhaps an environmental group, a trade union, or a professional association.

Now suppose an on-line "proxy exchange" is established, allowing millions of investors around the world to conveniently transfer proxy rights to whomever they like. What will recipients of all those proxy rights do with their new economic power? How will corporations be transformed?

Doesn't this just scream Personal Accounts at you? With millions more people savings billions of pounds through Personal Accounts this will result in a further shift in shareownership towards the ordinary punter. The problem is, of course, that the result could be that all the power relating to that ownership could accrue to fund managers rather than the real owners or their representatives. Why not instead allow individual savers to allow a third pirty to handle voting for them? Notably they even suggest that unions could be involved.

I think this is a great idea, and one that could be pushed with PADA when they carry out their consultation on the investment arrangements of Personal Accounts later this year.


Paulie said...

Here's a source of investment for this idea:

Tom P said...

cheers - I might give that a bash!