February 2013 Newsletter
A Commitment to Corporate Reform Leads to
Growth of Fund
This momentum is exactly what we have been anticipating. Together our investments constitute a critical mass, large enough to wield considerable authority as corporate shareholders. We are increasingly harnessing this power, using our pension dollars to level the playing field and rectify exorbitant corporate practices.
We decided to start this newsletter in order to share the achievements of your fellow union members and to track the progress of this rapidly growing fund. This month, read about the $3 billion milestone reached by the Index Fund and how fund shareholders have engaged a number of poorly performing companies to reform their executive compensation policies and practices.
The ITC is proud to offer the tools to assist unions in affecting meaningful corporate change and creating jobs in their communities. This success, however, would not be possible without the commitment of pension funds from across the trades.
President & Managing Director
AFL-CIO Investment Trust Corporation
“The AFL-CIO Equity Index Fund represents a powerful opportunity for union, Taft-Hartley and public employee pension plans. $3 billion is a major benchmark to hit in little under two years. The fund’s rapid growth is an indicator of the value of proxy voting power to improve corporate governance, and thereby help pension plans provide a secure retirement for working families.”
– Richard Trumka, President, AFL-CIO
AFL-CIO Equity Index Fund Surpasses $3 Billion in Commitments
Signals Investor Demand For Corporate Governance Reform
The AFL-CIO Investment Trust Corporation (ITC) announced that the AFL-CIO Equity Index Fund has surpassed $3 billion in investments by union, Taft-Hartley, and public employee pension funds. This milestone comes only five months after reaching $2 billion in September. To date, commitments have been made by over 50 pension plans served by 18 different consulting firms.
The AFL-CIO Equity Index Fund is a collective investment fund available to qualified pension plans. Launched in March 2011, the fund tracks the returns of the broad U.S. large-cap equity market, as represented by the S&P 500 Index. The fund is managed by ASB Capital Management, a registered investment adviser based in Bethesda, MD.
The rapid growth of the AFL-CIO Equity Index Fund signals the demand for investments that promote good corporate governance. Union members throughout the country are realizing that they have a voice as owners of corporations in which their pension funds are invested. This voice comes in the form of proxy voting, which allows investors to exercise their ownership rights by supporting important shareholder initiatives on corporate accountability, responsible business practices, and executive compensation. All proxy voting for the AFL-CIO Equity Index Fund is done in accordance with the AFL-CIO’s proxy voting guidelines.
For 2013, the AFL-CIO Equity Index Fund has engaged a number of poorly performing companies to reform their executive compensation policies and practices. According to the AFL-CIO’s Executive Paywatch website, the ratio of CEO-to-worker pay between CEOs of the S&P 500 Index companies and U.S. workers widened to 380 times in 2011, up from 42 times the average worker’s pay in 1980. The AFL-CIO Equity Index Fund’s shareholder resolutions for the 2013 proxy season seek to reform a variety of equity compensation practices that can reward poor performance by executives.
The AFL-CIO Equity Index Fund is one of several pension investment vehicles created by the AFL-CIO. The AFL-CIO Building Investment Trust provides competitive risk-adjusted returns through nationwide investments in institutional quality commercial real estate while promoting economic development and creating union jobs. The AFL-CIO Housing Investment Trust is a fixed-income investment fund that invests primarily in government and agency-insured and guaranteed multifamily mortgage-backed securities.
“We have a tremendous opportunity to invest our dollars in a way that reflects our values. That is what the AFL-CIO Equity Index Fund is all about – pooling our resources in order to be able to vote through proxy strength in the interest of our members’ pension plans and all working families.”
– David B. Durkee, International President, BCTGM