The large influence that just a few passive index fund managers have on corporate governance is “not a good development” for the U.S., remarked Charlie Munger, Berkshire Hathaway’s vice chairman, at Berkshire’s annual meeting in Omaha on Saturday. “I don’t think it’s good for the country to have three passive investors” telling companies what “proper governance” is, Munger said. Berkshire chief executive officer Warren Buffett said during the annual meeting that passive index giants care about keeping their assets under management and will do what’s “politically acceptable” out of self interest. “They want to get bigger,” he said, so they end up voting in a way that reflects public opinion so politicians won’t “get mad” at them and regulate them in some way. “They are certainly not going to follow a policy which is going to cause a backlash that causes them to be a lot smaller,” said Buffett.
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