Shaping governance practices

Indian institutional investors have important lessons to learn from the policies of an investment management company

A few weeks ago, F William McNabb III, chairman and chief executive officer of The Vanguard Group, an investment manager with US$4.4 trillion under management, issued an open letter to the directors of public companies worldwide (https://about.vanguard.com/-investment-stewardship/governance-letter-to-companies.pdf). This was accompanied by the Investment Stewardship Annual Report (https://about.vanguard.com/investment-stewardship/annual-report.pdf). Vanguard is credited with the creation of and focus on index funds and is the ultimate long-term investor — the fund will hold shares if a company is an index stock. Given this, governance matters hugely.
 
In the letter to boards, Vanguard has reiterated its commitment to investing for the long term