March 2014 Newsletter
EIF Votes with AFL-CIO 100% of the Time
As you read this, union pension funds—both public and private—have hundreds of billions of dollars invested in S&P 500 index funds.
Here is the truth: most likely, those funds’ proxies are being voted opposite AFL-CIO Proxy Voting Guidelines a majority of the time.
Worse yet, in most cases, those funds are paying more in fees and expenses than they would have if they were invested in the AFL-CIO Equity Index Fund, which has an investment management fee of 1.5 basis points — one of the lowest known management fees of any index fund.
Additionally, those funds are likely not performing as well in terms of returns. The AFL-CIO Equity Index Fund ranks in the top 15 percent in returns in the Lipper S&P 500 Index Fund Universe Rankings.*
So let’s change that.
While the AFL-CIO Equity Index Fund is already the fastest growing fund in AFL-CIO history, can you imagine what it could mean for us in the labor movement if we all invested in our own fund, rather than those of others?
Think of what we can do as shareholders with all that leverage. We can support initiatives like increasing company transparency, accountability around executive compensation, support for worker organizing and contract campaigns, and so much more.
So if your union pension fund is currently being invested in another Index Fund, then please reach out to us today to receive a presentation for you and your management consultant.
President & Managing Director
AFL-CIO Investment Trust Corporation
Brandon Rees is the Acting Director of the AFL-CIO Office of Investment
The AFL-CIO has released the 2013 AFL-CIO Key Votes Survey. The Survey is designed to help pension fund trustees fulfill their fiduciary duty to monitor the proxy voting performance of investment managers. You can download a pdf version HERE.
The AFL-CIO Key Votes Survey rates the voting practices of investment managers by surveying how they voted on proposals representing a worker-owner view of value. This worker-owner view emphasizes management accountability and good corporate governance. These proposals are assessed by the AFL-CIO Proxy Voting Guidelines and managers are ranked by the percentage of votes cast in accordance with the guidelines.
In 2013, the AFL-CIO Equity Index Fund voted 100 percent of the time for proposals that are consistent with AFL-CIO Proxy Voting Guidelines.
California School Employees Association (CSEA)
CSEA members perform a wide range of essential work in our public schools and community colleges, including security, food services, office and clerical work, school maintenance and operations, transportation, academic assistance and paraeducator services, library and media assistance, computer services and more.
CSEA was started in 1927 and in 2001, members voted to become an independently chartered union of the AFL-CIO. CSEA has been a champion about promoting AFL-CIO initiatives including the AFL-CIO “Family of Funds.”
“Our member’s pensions are among the most valuable assets we provide,” said Michael Bilbrey, Association President of CSEA. “The AFL-CIO Equity Index Fund is a powerful opportunity for pension plans to reduce costs, while promoting good corporate governance through proxy voting and shareholder activism at the same time.”
Shepard Burr is President of ASB Investment Management division of ASB Capital Management, LLC.
The AFL-CIO Equity Index Fund continues to live up to its performance goals. Its returns are tracking the S&P 500 Index closely, and it ranks in the top 15% of the Lipper US/All Share Classes/S&P 500 Index Universe for the quarter-to-date, one-year, and two-year periods (at 12/31/13).
In fact, in 2013 the Fund’s net return beat the Lipper S&P 500 Index Fund Universe average return (net of fees) by 65 basis points!
The AFL-CIO Equity Index Fund will observe its twelfth full quarter of operation at the end of this quarter. We are very pleased about the Fund’s strong performance, meaningful collateral benefits, and low fees.
What Union Presidents Are Saying About the AFL-CIO Equity Index Fund
“The AFL-CIO Equity Index Fund votes 100 percent with the AFL-CIO Proxy Voting Guidelines. Why is this important? It gives workers’ pension plans a seat at the table around issues impacting corporate governance including board independence, the company’s long-term financial performance, the overall conduct of the company, and the board’s responsiveness to shareholders.”
– Ray Hair
American Federation of Musicians of the United States and Canada (AFM)
“There’s only one route to take if we want to ensure that pension dollars are voted the right way. The AFL-CIO Equity Index Fund gives workers an important voice in corporate decision-making through shareholder activism and proxy voting — it gives us a say about how the corporations we labor for are managed. ”
– F. Leo McCann
American Train Dispatchers’ Association (ATDA)
“Executive pay excesses come at the expense of shareholders, as well as the company and its employees. That is why labor-friendly vehicles like the AFL-CIO Equity Index Fund are so important — it allows us to engage in shareholder activism to address issues of excessive compensation.”
– R. Thomas Buffenbarger
International Association of Machinists and Aerospace
“The AFL-CIO Equity Index Fund’s biggest competitors often vote against the AFL-CIO Proxy Voting Guidelines. That’s why it is critical that unions support funds that share our values.”
– William P. Hite
United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry (UA)
“Investing our pension funds in labor-friendly ventures like the AFL-CIO Equity Index Fund is simply the right thing to do. It gives us the power to make sure our investments support all workers as pension plan participants.”
– Joseph T. Hansen
United Food and Commercial Workers International Union (UFCW)
Fund is subject to market risk. The AFL-CIO Equity Index Fund is not a mutual fund. It is a collective investment fund established by Chevy Chase Trust Company under Maryland banking law, and its units are exempt from registration under the Securities Act of 1933. Investments in the Fund are not deposits, obligations of, or insured by Chevy Chase Trust Company, ASB Capital Management LLC, the United States government, or any United States government agencies. This is not a prospectus and has not been approved by the SEC. The decision to participate in the Index Fund or to offer the Index Fund as an investment option (in the case of self-directed accounts) must be made by the trustees of each individual plan after reviewing all available information. The AFL-CIO is not an investment advisor or investment manager, and does not have any intention of, and shall not be deemed to be, advising any plan, its trustees, its participants or its beneficiaries regarding the making of an investment in the Index Fund. Moreover, the AFL-CIO makes no representation or warranty, express or implied, as to the results to be obtained by the Fund or any investor in the Index Fund.