Big Pharma and mainstream media are largely owned by two asset management firms: BlackRock and Vanguard.
(childrenshealthdefense.org)
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This gets posted here every few weeks: "Vanguard and Black Rock own majority shares in every public company 😱"
These are mutual fund companies. In Vanguard's case, Vanguard itself is owned by its own mutual funds and the mutual funds are owned by regular people investing in their 401ks.
That is not correct.
When you purchase a mutual fund stock what you are really doing is depositing your money into an account there, and they are using that money to buy whatever stocks they want, within the bounds of the contract for that mutual fund. Its the same as putting your money into a bank. They can use that money however they want. Its no longer your money, its theirs. What you have are contractual withdrawal rights up to the amount deposited, plus whatever interest you have gained per the contract, or in the case of a mutual fund, whatever dividends and/or gains the underlying stocks have accrued.
Those withdrawal rights are not your money. Your money is being used (per your contract) by the fund managers to buy stocks.
The voting rights for all stocks purchased for a mutual fund are owned by whoever purchases the stock. It could a corporation, or it could be the individual fund manager. You, for your mutual fund purchase own no voting rights on the underlying stocks. Only the purchaser does, because it was their money (that you gave them) that was used to purchase it.
That is how mutual funds work. The stocks are owned by the company that buys them (or the fund manager depending). The fact that you gave them your money to do it makes you their source of funding by deposit (just like a bank and their loans/asset purchases), nothing more.
Which part of what I wrote was incorrect?
What you've written is not entirely accurate. Investing in a mutual fund is buying shares in the entity that is the mutual fund. And the mutual fund's manager uses that money to buy other investments, vote on behalf of the mutual fund shareholders, etc. You do have voting rights for the Board of Trustees for the mutual fund. And that board selects the manager.
I was accurate, just not complete. Yes, you do have input into some funds in a similar way to owning stock in a company has input into that company (though not exactly the same, see below), but you have no input into how they manage their assets (the stocks that make up the fund). Owning part of a fund is a little bit like owning part of a shell corporation (unless you own a whole lot of it by yourself, in which case you might have meaningful input by leverage (aka not "legal" but rather "effective" ownership)).
Shell corporation:
A fund does not own the stocks (e.g. Mutual Fund)
The key (legal) word there is represents. A share of a fund represents investment in many different stocks. It isn't actual investment in many different stocks, it represents it.
It symbolizes ownership in the underlying stocks, which is to say, its not in any way shape or form actual ownership in the stocks. Not one iota.
The fund manager, which might be a corporation (i.e. BlackRock) owns the stock. Whatever name is on the stock purchase order owns the stock (it must be a person (a Corporation is a legal person, a fund is not)).
A fund is just a pool of money. That is all it is. It owns nothing, it holds no assets, its not anything at all. Just like a shell company.
The company that created the fund has contracts they must follow as a legal corporation, but the fund itself (that which you are buying) is nothing. The fund manager may have contractual obligations to purchasers of a funds "stock" (which may give you "voting rights" to influence the fund manager), but the fund itself is nothing. It's a shell, and that is what a stock in a mutual fund is; a piece of a money pool (where you don't actually own any of the money, you only have withdrawal rights). The money you put in belongs to the corporation that set up the fund to do with as they please (within the bounds of the contract that sets up the fund).
From the SEC on the definition of funds (page 8):
It may seem like I am splitting hairs here, but this has fundamental implications for the ownership of the underlying stocks (the REAL companies) and the money that resides in the pool of money itself (aka the fund).
The money you give them is theirs to do with as they please. You have no input into their use of the money you give them. The only thing you can do with that money is withdraw it (sell your share). When you sell a share, it doesn't in any way change any of the stock ownership of the fund (unless you sell so many that it forces them to sell shares to fulfill their contract to give you money for that withdrawal).
The point of both this video and my paper on this topic (which goes into much greater detail than the video) is that these funds own these other companies.
For example, BlackRock owns almost 8% of General Motors. They don't really, if you read my report, because BlackRock doesn't own BlackRock. But the legal entity BlackRock does have ALL legal ownership of 8% of the stock of General Motors. It doesn't matter if most of the money they used to buy that stock is from a mutual fund that got 30% of its funding from selling shares in that fund to 401k's. That funding source is irrelevant to who owns the stock; to who owns GM.
Thank you.
I agree that shareholders of mutual funds do not have direct ownership of the mutual fund's assets. The service that mutual funds provide to the general public is the ability to pool money and implement an investment strategy that would be too expensive for individual (usually retail) investors, such as matching the S&P500 index. In exchange for this service mutual fund shareholders forfeit an expense ratio, possibly other fees, and voting/ownership rights of the underlying assets.
My frustration in my top comment was that these posts come up every few weeks, and the implication is that because BlackRock and Vanguard own significant percentages of public companies something nefarious is going on. But I've yet to see anything nefarious. Yes the fund managers decide how to vote for their stocks, but those votes are almost always aligned to recommendations made by the management of those public companies.
So what's the complaint? Where's the nefarious activity going on? Is it that BlackRock and Vanguard can go rogue and vote against the interests of the mutual fund shareholders? Is it that these companies can run off into the sunset with everyone's money?