Proxy Voting

Overview

Registered investment companies—including mutual funds, closed-end funds, and ETFs—have dual roles as investors in securities of public companies and as issuers of securities with their own shareholders and boards of directors.

As investors in corporations, funds are entitled to vote on proxy proposals put forth by a company’s management or its shareholders. As part of its fiduciary duty to a fund, the fund’s board of directors, acting on behalf of the fund, is responsible for the voting of proxies relating to the fund’s portfolio securities. A fund’s board typically (but not always) delegates proxy voting responsibilities to the fund’s investment adviser but maintains oversight of this function.

As issuers of securities, funds periodically have their own shareholder meetings. In general, open-end funds do not hold annual shareholder meetings; rather, a meeting is held when a shareholder vote on a particular matter is required, such as the election of fund directors or approval of an acquisition or merger. Closed-end funds are required to hold annual shareholder meetings by the rules of the exchange on which the fund’s shares trade.

Proxy Voting Committees & Working Groups

ICI Contacts

News & Publications

ICI Viewpoints

Fixing Our Broken Proxy Voting System

Key Insights: The fund proxy voting system is costly and hampers fund governance and the investor experience. Smaller fund complexes are often disproportionately impacted by the burdens of proxy campaigns. The Securities and Exchange Commission (SEC) can greatly improve the fund proxy voting system by adopting pragmatic reforms, including a new “supermajority method” of obtaining shareholder approval. Just as publicly traded companies do, mutual funds, ETFs, and closed-end funds periodically submit items to their shareholders for approval, including director nominations and other policy and...

November 15, 2024

ICI Viewpoints

Proxy Advisory Firms—Killing Closed-End Funds Softly with Their Policies

Closed-end funds (CEFs) trying to fend off hostile hedge funds and other activist investors are facing another headwind from an unexpected corner: proxy advisory firms. Proxy advisors, which make recommendations to institutional investors on management actions and shareholder proposals associated with their investments, are providing one-size-fits-all advice that might be appropriate for operating companies—think S&P 500 companies—and applying it to CEFs. This awkward fit has the unintended consequence of making CEFs more vulnerable to activist takeovers, costing retirees money in the process...

October 25, 2023

ICI Viewpoints

Shareholder Activism Threatens Closed-End Funds and Their Investors

Middle-Class Investment Tool Over the past 80 years, closed-end funds (CEFs) have helped millions of Americans achieve their long-term financial goals. Representing $252 billion in assets as of year-end 2022, CEFs are professionally managed, subject to a robust regulatory framework, and have several unique features that have made them a popular product for many middle-class investors. CEFs can invest across public and private markets, providing access to less liquid assets, often those with higher yields. Exposure to these assets offers shareholders the potential for greater diversification...

May 24, 2023

News Release

ICI Statement on SEC Proxy Voting Rule Amendments

Washington, DC; November 2, 2022—Investment Company Institute (ICI) Deputy General Counsel for Markets Sarah Bessin released the following statement today after the Securities and Exchange Commission (SEC) adopted rule amendments on proxy voting disclosure: “The final rule the Commission has adopted today will help modernize the reporting of proxy votes. ICI supports many elements of the rule, including completing the ‘say on pay’ rulemaking required by Dodd-Frank, requiring data tagging in XML on Form N-PX, and allowing electronic options for funds to make their proxy voting records available...

November 2, 2022