Vanguard Investor Choice: Freedom of choice for advisors and clients

Over the past 25 years, Vanguard and the investment advisory community have built a strong partnership, with many advisors adopting Vanguard’s Advisor’s Alpha® framework. This shift toward more transparent, positive-sum activities has significantly improved outcomes for advisors and their clients.

Value to an advisor

Freedom of choice and simplicity in execution: Vanguard Investor Choice is a simple election that advisors and their clients can exercise that instructs Vanguard how to vote the underlying corporate proxies for each participating investor’s pro rata share of an eligible fund or ETF.  Financial advisors who are already empowered to exercise voting authority on behalf of their clients for individual corporate proxies or fund-level proxies will be invited to participate if their clients hold an eligible fund or ETF. In instances where advisor clients hold proxy voting authority, invitations will be delivered directly to those investors. This pilot program provides a clear and straightforward way to align a proxy policy selection with client preferences.

Proxy preferences: Incorporating client preferences into the overall client experience is crucial. Through Investor Choice, advisors can ensure that their clients’ voices are heard in the proxy voting process, enhancing the personalized nature of their advice offering. You can review the five policy selection options here.

Understanding the macro environment: Vanguard can help advisors and firms better understand the macro environment and the benefits of voting choice for them and their clients. This knowledge can be leveraged to make more informed decisions and provide better service.

Why now?

A history of innovation: From the creation of the first index fund for everyday investors to pioneering innovative products for advisors and their clients, Vanguard has democratized investing for millions of people. This legacy of innovation continues with Vanguard’s Investor Choice offer.

Reduced friction costs: Ongoing technological advancements have further reduced friction costs, making individualized proxy preference services more accessible to a broader audience. This accessibility is crucial for advisors looking to offer more tailored solutions to their clients.

Integral role of advisors: Advisors and their firms play an integral role in determining the investment products best suited for their clients. By representing their clients’ preferences in the proxy voting process, advisors can further enhance the value they provide.

What we offer

Seamless administration: Once a policy is selected, Vanguard administers proxy voting on the corporate ballots that funds participate in, in proportion to the underlying investors’ holdings and according to the chosen policy’s recommendations. This ensures that the voting process is efficient and aligned with client preferences.

Current eligible funds

• Vanguard ESG U.S. Stock ETF
• Vanguard S&P 500 Growth Index
• Vanguard Russell 1000 Index
• Vanguard Mega Cap Index
• Vanguard Dividend Appreciation Index
• Vanguard High Dividend Yield Index
• Vanguard Tax-Managed Capital Appreciation
• Vanguard Tax-Managed Small-Cap

How to participate

• Identification of voting authority: At this time, a third-party service, Broadridge Financial Solutions, uses its beneficial network to identify whether an advisor or end shareholder has voting authority and distributes materials to them via mail or email. Broadridge is a leading financial services technology company who handles the proxy materials distribution and voting process for banks, broker-dealers, and funds.
• Access to policy selection website: Advisors or shareholders use a QR code or email link to access the policy selection website. You can review the five policy selection options here.
• Policy selection:  Invitations to participate in Investor Choice will be delivered to the authorized party for each eligible account, which may be the advisor or the end investor, depending on the account setup and individual firm practices with respect to proxy voting.

Our ask

Feedback for continuous improvement: Vanguard continues to gather feedback from those engaging in each of our pilot iterations. Your input helps us define the future state of our proxy voting services, ensuring they meet the needs of both advisors and their clients.

By reimagining proxy voting, Vanguard is committed to providing advisors and their clients with the simplicity and freedom to choose a policy option aligned with clients’ preferences, ultimately enhancing the investment experience for all.

Notes:

For more information about Vanguard funds and Vanguard ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

All investing is subject to risk, including the possible loss of the money you invest.

ESG funds are subject to ESG investment risk, which is the chance that the stocks or bonds screened by the index provider or advisor, as applicable, for ESG criteria generally will underperform the market as a whole or, in the aggregate, will trail returns of other funds screened for ESG criteria. The index provider or advisor’s assessment of a company, based on the company’s level of involvement in a particular industry or their own ESG criteria, may differ from that of other funds or an investor’s assessment of such company. As a result, the companies deemed eligible by the index provider or advisor may not reflect the beliefs and values of any particular investor and may not exhibit positive or favorable ESG characteristics. The evaluation of companies for ESG screening or integration is dependent on the timely and accurate reporting of ESG data by the companies. Successful application of the screens will depend on the index provider or advisor’s proper identification and analysis of ESG data. The advisor may not be successful in assessing and identifying companies that have or will have a positive impact or support a given position. In some circumstances, companies could ultimately have a negative or no impact or support of a given position.

The Vanguard Russell 1000 Index Fund and Russell® are registered trademarks of Russell Investments and have been licensed for use by The Vanguard Group, Inc. The Product(s) are not sponsored, endorsed, sold or promoted by Russell Investments and Russell Investments makes no representation regarding the advisability of investing in the Products.

The S&P 500 Growth Index is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates ("SPDJI"), and has been licensed for use by Vanguard. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global ("S&P"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Vanguard. Vanguard S&P 500 Growth Index Fund is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Growth Index.