Vanguard expands pass-through voting to all US equity funds

What Vanguard is changing

Vanguard said Monday it will widen a program meant to align fund votes at shareholder meetings with what individual investors want. Starting next year, anyone in the firm's US equity funds can choose a voting policy that applies to their portion of each fund's ballots.

The move spans $8.2 trillion across Vanguard's US equity lineup and includes the Vanguard Morningstar Total Stock Market Index Fund, which is the world's biggest mutual fund.

How Investor Choice works

Investors who enroll select a proxy voting approach that matches their views, such as siding with company management or emphasizing environmental, social or governance priorities. That policy then drives how their slice of a fund's votes is cast on director elections, executive pay and major ESG matters at public company meetings. The pass-through setup generally does not let an investor make a separate choice on every single ballot item.

Vanguard has offered Investor Choice since 2023. With this update, the assets covered by the program have doubled.

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The broader shift and the politics around it

Investor Choice puts Vanguard alongside BlackRock and State Street in rolling out pass-through voting options. The pitch from these managers is more choice and a wider reflection of client views.

John Galloway, Vanguard's global head of investor engagement, said the program can reduce worries about an asset manager's voting biases and noted the firm engages with policymakers. "We have over 50 million individual investors in the US, and tens of millions more internationally; those individuals have a wide range of perspectives," he said. "And actually what Investor Choice program participation is showing us is we were right: it's kind of like a normal distribution, they're across the spectrum." The rise of pass-through voting has coincided with greater US political scrutiny of how managers appear to vote on proposals tied to ESG goals.

Why it matters for your portfolio

Pass-through voting is expanding just as attention intensifies on how big managers handle ESG-related proposals. In plain English: more of your fund's votes can mirror your stance, whether that leans pro management, pro ESG, or somewhere in between, though it is set by policy rather than item by item.

If you own broad market index funds, this changes how your voice is counted at annual meetings and could influence outcomes on directors, pay and policies that shape long run corporate direction.

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