June 2014 Newsletter
AFL-CIO Equity Index Fund’s Proxy Votes Wield Power on Wall Street
Why is it important for the AFL-CIO Equity Index Fund to continue to grow? To answer that question, all you have to do is look at how corporate executives continue to be compensated.
In 2013, the CEOs of the S&P 500 companies received, on average, $11.7 million in pay, or 331 times that of the average worker.
According to the AFL-CIO’s Executive Paywatch website (www.paywatch.org), the gap between CEO pay and what minimum wage workers earned last year was even more startling: 774 times. And here is a statistic from the site that shook me the most: 49.6 percent of the workers earning minimum wage in this country are older than 25.
As the gap between CEOs and workers continues to widen, it is important, now more than ever, that we make the best use of the hundreds of billions of dollars that union-affiliated pension funds currently have invested in actively managed funds. If we were able to move just 10 percent of those funds—or $50 billion—imagine the impact we could have if that money could be voted 100 percent in accordance with AFL-CIO Proxy Voting Guidelines. We could positively influence the direction of the country and hold corporate America accountable.
If you are a union trustee and your fund is not currently invested in the AFL-CIO Equity Index Fund, then please reach out to us immediately to set up a meeting to discuss the Fund. We truly believe it is a “no-brainer” — with one of the lowest known management fees (only 1.5 basis points) of any index fund out there and the only Fund of its type endorsed by the AFL-CIO.
If you are angry that in 2013 S&P 500 companies made an average profit of $41,249 per employee, but aren’t passing enough of those profits down to their workers, then join the labor movement in investing our values.
President & Managing Director
AFL-CIO Investment Trust Corporation (ITC)
Brandon Rees is the Acting Director of the AFL-CIO Office of Investment
High Frequency Trading Under Scrutiny by Regulators
Spurred by the release of Michael Lewis’ scathing review of the practice in his latest book, “Flash Boys,” the Securities and Exchange Commission, the Justice Department, the Federal Bureau of Investigation, and the Commodity Futures Trading Commission are each probing whether trading firms with super-fast computers are engaging in illegal activities by using privileged information not freely available to others to buy stocks at an advantage and then resell them to other investors.
High-frequency trading, or rapid-fire trading as it is also known, can hurt the typical investor by allowing privileged traders to profit at their expense. But, investors in the AFL-CIO Equity Index Fund are insulated from high-frequency trading, because the Equity Index Fund’s buy-and-hold strategy minimizes trading costs. When the fund does have to trade, its orders are executed on the main stock exchanges, 15 minutes before closing and cannot be modified once they are locked in, ensuring that the fund trades at the best possible price
Shepard Burr is President of ASB Investment Management division of ASB Capital Management, LLC.
The AFL-CIO Equity Index Fund continues to be one of the top funds of its type in the country. Through the first quarter of 2014, the Fund ranks in the top 9% in returns in the Lipper universe of S&P 500 Index funds for every period measured: year-to-date, one-year, two-years, and three-years. Through low management fees, low Fund expenses, and careful, full-replication management, the AFL-CIO Equity Index Fund is among the best performers in its class.
Although past performance is not a guarantee of future results, having just passed its three-year anniversary, the Fund has a three-year annualized return of 14.58%. As a result, the AFL-CIO Equity Index Fund has, so far, been making a big contribution in helping participating pension plans meet their actuarial assumptions.
What AFL-CIO State Federation Presidents are Saying About the AFL-CIO Equity Index Fund
“The AFL-CIO Equity Index Fund is about giving us the power to ensure that companies are being transparent. It gives us a voice. As the Fund grows, our ability to create change as shareholders dramatically increases.”
– Lori Pelletier
“Unless a union pension fund is invested in the AFL-CIO Equity Index Fund then, most likely, those funds’ proxies are being voted opposite AFL-CIO Proxy Voting Guidelines a majority of the time. We must invest in our own values.”
– Robert Shaffer
– Kim Floyd
Wyoming State AFL-CIO
“I am tired of reading about all these executives who walk away with obscene golden parachutes. That’s what makes the AFL-CIO Equity Index Fund so important; we have a voice to impact these types of decisions.”
– Tom Ricker
North Dakota AFL-CIO