Mutual funds are suggesting sweeping investment policy changes for the coming year, and hoping shareholders will allow them to put more money in foreign stocks and real estate, according to The Wall Street Journal.
Due to typically poor response to proxy-voting ballots, fund companies that have not made changes in a long time are inundating shareholders with phone calls, encouraging them to vote.
The proxies are confusing a lot of investors who are not used to the process. San Francisco-based Dodge & Cox Funds hadn’t proposed significant changes in nearly 10 years, but it is holding a special meeting for a vote.
Franklin Templeton Investments hasn’t held a meeting in over a decade and is finishing up its vote this month. Oppenheimer Funds, Putnam Investments and Royce Funds are also holding meetings in the coming weeks.
When an investor receives a large proxy in the mail, they should read it carefully, as most questions are answered in the beginning pages. If an investor doesn’t understand it, they should call the fund company or the proxy solicitor listed.
Fund companies advocate shareholders to vote because if they do not receive high participation levels, they have to start soliciting, which costs money.
The most common and potentially the most worrisome proposals are changes to investment limits. Other common changes include asking for greater flexibility in real estate and commodities investments and taking larger stakes in foreign holdings.
Fund companies proposing changes won’t necessarily put new plans in place. Dodge & Cox points out that this doesn’t alter its long-term investment strategy and doesn’t mean the changes will necessarily be utilized. A few years from now, comments Charles Pohl, chief investment officer at Dodge, if investors look for changes, “the only thing is, we may own more than 10%” of some companies in the international fund.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.