INVESTING New law forces mutual funds to explain their voting policies
Mutual funds must explain policies for shareholder votes.
MILWAUKEE JOURNAL SENTINEL
MILWAUKEE -- A bright new light will shine on the nation's mutual funds this week, but whether the revelations will help or hurt the funds and their owners is a subject of spirited debate.
The illumination comes from new Securities and Exchange Commission regulations that require mutual funds to disclose their policies for deciding how to vote on matters put before shareholders of the companies they own, and how they actually cast such votes through proxies.
The requirements were adopted last year after a protracted fight led by labor organizations and shareholder activist groups. Under the new rules, mutual funds must provide the information to anyone who asks.
In addition, the funds must file with the SEC a report detailing their votes. Deadline for the first such reports is Tuesday. They are on a new form N-PX, and will be available through the SEC's online EDGAR service. Some mutual funds also will post the information on their own Web sites.
According to those who fought for the regulations, the result will be better-informed mutual fund owners equipped to make more intelligent decisions about how to invest their money.
The information in the new reports "tells you a couple of things," said Peter Kinder, president of KLD Research & amp; Analytics Inc., Boston, an independent social research company. "It tells you in general how mutual fund managers are approaching their responsibilities. It tells you something about their philosophy of owning shares, particularly if you look at their votes on social and employment issues."
But fund companies report little spontaneous demand from their shareholders for such information.
"We haven't had anybody ask us anything about how we vote our proxies," said Jeff May, senior vice president and treasurer of the Nicholas Co., Milwaukee, which manages seven mutual funds with total assets of about $3.5 billion.