Roff: Woke investing may threaten your retirement security
More than a few economists predicted a period of record economic growth would follow the end of the lockdowns associated with the pandemic.
It didn't happen. What America got instead was a period of prolonged, rapidly rising inflation that devalued wages and retirement savings. Now, as
Bidenflation certainly plays a part in that. The Consumer Price Index rose by nearly 5% between
There may, however, be another problem most people currently saving for retirement have not yet recognized. The large money management firms to whom they have entrusted their savings may not be generating the maximum possible return on their investment because they've joined the woke crowd on
Economists believe these firms own about 75% of all the publicly traded shares available in
The ultimate effect of this, says the
Some people believe corporate power should be used to push for social justice, racial and gender equity in the C suite, responsible climate policy, and other progressive nostrums. On a case-by-case basis, individual investors should be free to pursue that course. After all, it's their money.
If, on the other hand, fund managers use their positions to push policies that work against their ability to obtain the highest return on investment for their shareholders, they are abusing their power and turning their back on their fiduciary responsibility.
"More than half of the total investment in stock-based funds is allocated to passively managed ETFs and index funds, which simply mirror benchmarks such as the S&P 500," the
The bigger the fund, the more power the relatively small universe of fund managers (when compared to the total number of people invested in those funds) have to use other people's money to dictate how publicly traded corporations should operate. They can vote Exxon out of the oil business and gasoline engines out of
All that's fine with
Instead, Biden wanted to make it possible for ESG concerns to carry equal weight. When
At the corporate level, whether the decision to vote in favor of these ESG resolutions meant to change corporate behavior is being made at the top or by younger, less experienced middle managers whose social conscience dictates are ultimately at odds with their obligations to their clients, it's putting social politics into boardrooms where they don't belong.
At the moment, the remedies available to retirees whose portfolios are making as much as they should or could have little recourse. The only way to fight back right now is for investors to move their money out of the hands of people using it to pursue social justice and into the hands of those who are using it to make money. That's rarely the same thing.
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The only way to fight back right now is for investors to move their money out of the hands of people using it to pursue social justice and into the hands of those who are using it to make money.
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