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Index funds like VTI/SCHB are "passive", but own a huge number of shares of companies. If a company has a shareholder vote:

  1. Do Vanguard/Schwab/etc. cast votes?
  2. Since they are "passive" and just tracking the index, how would they decide how to vote—especially if it is a contentious vote?
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Yes, mutual fund companies vote in shareholder elections.

They do, however, have a fiduciary duty to their clients who hold the shares of the funds:

Advisers are often charged with exercising voting authority on behalf of clients and must determine how to do so consistent with their fiduciary duties.

As a side note, "huge" may be an overstatement relative to the total number of shares. If you look at the largest AAPL Shareholders as of Dec 2024, no one fund company holder more than 9% of shares:

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Could that be enough for one holder to swing a close election? Possibly, but they still have a fiduciary duty to the owners of units of the funds.

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    Presumably, if someone like Vanguard owned AAPL in several different funds, with possibly different goals/ethoses, fudiciary duty could conceivably compel them to vote differently for different funds.
    – TripeHound
    Commented Dec 10 at 15:39
  • Blackrock and Vanguard, maybe some others, have started pilot programs where shareholders can specify a voting policy, such as "follow the boards recommendation" or "ESG" or "don't vote".
    – Kelvin Sherlock
    Commented Dec 10 at 20:20
  • 8.9% of Apple is a pretty huge amount :)
    – spon
    Commented Dec 10 at 22:03
  • In passing, most index funds decide that "consistent with their fiduciary duties" means "vote for the policy that maximizes profit". It is this that makes so many publicly owned companies into soulless money grabbers, ignoring all other concerns.
    – DJClayworth
    Commented Dec 10 at 22:49
  • @spon it is a huge amount in and of itself ($332 Billion) but in terms of ownership it's not enough for one fund to dictate election results by themselves (other then close elections, of course).
    – D Stanley
    Commented 2 days ago

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