Statement by Director Jonathan McKernan on Monitoring the Passivity of Index Fund Complexes: Vanguard’s New Passivity Agreement
STATEMENT | DECEMBER 27, 2024
Statement by Director
Jonathan McKernan on Monitoring the Passivity of Index Fund Complexes:
Vanguard’s New Passivity Agreement
The passivity
agreement entered into by Vanguard today should enable the FDIC to
address, with respect to Vanguard, the concerns I raised in
January and several times since about gaps in the FDIC’s monitoring of
the purported passivity of the largest index fund
complexes.
Those concerns have some urgency given the rapid
growth of these index fund complexes and the growing body of academic
work and other evidence raising doubt about whether these index fund
complexes are truly passive. Some critics have pointed to evidence
that these index fund complexes have pushed ESG agendas at public
companies. Others have expressed concerns about the risks to
competition posed by concentrated ownership. Still others have focused
more generally on the concentration of power in a few institutional
investors.
Read Director McKernan's Full Statement
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