Many index and passive funds vote in line with Glass Lewis and ISS recommendations.

Factual claim (2025) that many index and passive funds vote in line with Glass Lewis and ISS recommendations. True: research or regulatory data show that a substantial number or share of index or passive funds vote largely in line with proxy-advisor recommendations (e.g. evidence of 'robo-voting' or high alignment rates). Mostly true: strong alignment is shown, but mostly for smaller passive funds, while the largest (BlackRock, Vanguard, State Street) use their own stewardship policies. Mixed: the evidence is split, with notable alignment but large passive managers often voting independently. Mostly false: the evidence shows that most large passive funds vote independently and alignment is limited, with the claim overstating a narrow finding. False: the evidence shows that passive funds generally do not follow ISS or Glass Lewis.

Set before the research began.

1. E1 Robo-Voting: Does Delegated Proxy Voting Pose a Challenge for Shareholder Democracy? Seattle University Law Review (Digital Commons), by John Matsusaka and Chong Shu · 14 January 2024

   “Overall, 33% of mutual funds robo-voted in 2021: 22% with ISS, 4% with Glass Lewis, and six percent with the recommendations of the issuer’s management.”

2. E2 Robo-Voting: Does Delegated Proxy Voting Pose a Challenge for Shareholder Democracy? Seattle University Law Review (Digital Commons), by John Matsusaka and Chong Shu · 14 January 2024

   “Despite the sizable number of funds that robo-voted in recent corporate elections, robo-voters controlled only about 1.5% of shares on average because they tend to be smaller than other funds.”

3. E3 Adviser, Index Votes Show Contest Correlation - The Deal The Deal · 4 December 2023

   ““While the big index funds have their own internal guidelines for proxy contests, our data suggests that in a majority of campaigns, their vote aligns with proxy adviser recommendations,” said Waheed Hassan, founder of ZMH Advisors.”

4. E4 Do Index Funds Monitor? Davidson Heath, Daniele Macciocchi, Roni Michaely, Matthew C. Ringgenberg (working paper, hosted by NYU Law) · 16 July 2020

   “On consensus votes (i.e., when there is agreement between firm management and ISS, a third party proxy advisor) we find that index funds and active funds vote identically.”

E1 finds that 33% of mutual funds robo-voted in 2021, 22% with ISS and 4% with Glass Lewis. That is a substantial number of funds, though the study covers mutual funds in general rather than passive funds specifically. E2 says these robo-voting funds tend to be smaller and held only about 1.5% of shares on average. E3 reports an adviser's data suggesting that, although big index funds have their own internal guidelines for proxy contests, their votes align with proxy-adviser recommendations in a majority of campaigns. E4 finds that index and active funds vote identically when management and ISS agree, which does not single out index funds as following proxy advisers; taken together, the evidence best fits the criterion of strong alignment mainly among smaller funds, with the largest managers using their own guidelines.