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Asset managers face increasing political risk stemming from concerns that they prioritize their own interests when voting on behalf of investors. Using survey evidence and structural estimation, Montagnes provides early evidence on how well asset managers represent their investors by studying the ideological alignment between the two in the initial implementation of “voting choice policies.”
When most people think about politics, they picture elections, campaigns, and courts. But increasingly, asset managers are playing a central role in policy questions. Through shareholder votes on environmental, social, and governance (ESG) proposals, investors can shape how firms approach critical issues such as climate change, workforce diversity, and executive oversight. However, because most Americans invest through mutual funds and exchange-traded funds (ETFs), they do not vote their shares directly. Instead, asset management institutions, most notably the “Big Three” — BlackRock, Vanguard, and State Street Global Advisors — cast votes on their behalf. Now, this has raised a fundamental question among regulators and policymakers: whose preferences are actually being represented when these firms vote?
At a December 5, 2025 American Politics Speaker Series event co-hosted by the Ash Center for Democratic Governance and Innovation and the Center for American Political Studies, Pablo Montagnes, associate professor of data and decision sciences and political science at Emory University, presented research to answer this question. His study, coauthored with Zachary Peskowitz and Suhas A. Sridharan, examined whether the new voting choice policies offered by major asset managers meaningfully capture what investors actually want.
Montagnes began by explaining the institutional problem. Over the past several decades, asset management institutions have come to dominate U.S. equity markets as more individual investors participate in mutual funds and ETFs. When investors do this, they delegate not only portfolio management but also shareholder voting to the asset manager. Securities and Exchange Commission rules require asset managers to vote in their clients’ best interests, but those interests can diverge sharply, especially on ESG questions.
As a result, policymakers are increasingly scrutinizing asset managers’ role in corporate governance and proposing various solutions, such as the Investor Democracy Is Expected (INDEX) Act, which would require firms to solicit voting instructions from clients. To address this growing political and regulatory pressure, the largest asset managers have introduced voting choice policies, which allow investors to select from a limited menu of policy choices, such as sustainability, faith-based values, and simple shareholder value maximization. These are, in part, an attempt by asset managers to pre-empt stricter regulation by demonstrating that they are acting in investors’ best interests. The key question, Montagnes stressed, is whether these menus really solve the representation problem or merely give the appearance of choice.
To address this, the researchers designed an original survey of 3,485 respondents, each of whom was asked to evaluate 37 out of 46 potential corporate proxy issues. These covered a range of environmental, social, and governance topics, such as whether a company should adopt a net-zero emissions target, whether board chairs should be independent, or whether firms should be prohibited from lobbying. Importantly, respondents were asked to give their “unconstrained” preferences, without being forced to consider trade-offs, to capture what they ideally wanted firms to do.
The researchers then turned to the voting choice policies themselves. In addition to the survey, they manually reviewed the proxy voting guidelines for 14 different policy platforms offered by large asset managers and inferred how each would align with the same set of issues included in the survey.
The results show that investor preferences about corporate policy are strikingly similar to regular political preferences when the issues have real-world analogues. On environmental and social issues, Democrats and Republicans diverge sharply, while those differences are less pronounced for governance. Governance issues also generate higher levels of uncertainty. Across all groups, voter choice policies that require firms to disclose information tend to be more popular than those that directly restrict corporate behavior.
To determine representation, the researchers calculated an agreement score with each voting choice policy — the fraction of the time the policy agrees with the respondent, excluding cases where the respondent was unsure. They then identified each person’s best-matching policy. On average, the maximum agreement score was about 76.7% for the general population of stockholders, and slightly lower for Republicans. Montagnes emphasized that this means investors are “modestly well represented” in agreement space.
A key implication of the analysis is how easily representation could be improved. Adding even a single, relatively simple voting choice policy that supports positions held by a majority of survey respondents would substantially increase alignment. This challenges the idea that existing voting choice policies already solve the representation problem.
Ultimately, Montagnes concluded, investors have clear preferences about corporate policy, and delegation to policy manuals captures some of those preferences, but not all. Because voting choice policies are incomplete contracts, they leave many investors ideologically underrepresented. Simple, more flexible additions to the menu could lead to marked improvements, suggesting that the future of investor voice in corporate governance will depend less on whether choice exists and more on how that choice is designed.
Dana Guterman is a content strategist, writer, and editor who helps organizations stand out through clear, compelling messaging. Having previously led communications and editorial teams, she now partners with academic and nonprofit clients, bringing sharp storytelling skills and a deep commitment to the Oxford comma to every project.
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