What does the "Hold" in Buy & Hold stand for?

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10/23/2015
11:50 AM - 12:40 PM
Many fund companies have responded to the demand for lower cost investments but Jack Bogle, founder of the Vanguard Group, has argued for years that they need to do a better job of speaking up for long-term investors. Fund companies have a poor track record when it comes to taking their corporate governance responsibilities seriously. Of specific interest for fiduciaries is the unhealthy persistence of corporate boards that lack independence. If the board is overly supportive of management, who will look out for shareholder interests on issues of CEO compensation, stock buybacks or other decisions that affect the bottom line?


The corporate boards of publicly traded companies aren't the only ones who suffer from potential conflicts of interest. Who is watching to ensure that custodians aren't selling your trade orders to high frequency traders? Morningstar now grades fund companies on the stewardship culture and you might be surprised by which companies receive low grades.


Buy and Hold investors don't need to hold their tongues or their votes. Several conflicts of interest often persist because the cost is diversified across all investors who have little economic incentive to act on their own. Consider with us what it would look like if a group of NAPFA advisors came together to mobilize the voice of long-term shareholders. We'll look to leading research from public pensions like Calpers and the Council of Institutional Investors (CII) for examples in stewardship best practices.

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