This isn't accidental, it's malicious enemy action. Overpaid fund managers are sick of seeing their business walk out the door in favor of funds with low/no fees, so there's a very active submarine campaign in progress to make BlackRock, Vanguard etc. seem like mustache-twirling villains, instead of "just a bunch of people owning shares".
For example, note how all the stories about institutional investors buying up housing stock mention BlackRock, even though REITs and private equity firms are doing much, much more of this business.
Also, Vanguard is run as a sort of cooperative where it is indirectly owned by the fundholders, which is why they were always incentivized to LOWER fees. The founder of Vanguard (Jack Bogle) probably left tens of billions of wealth on the table by creating that model (and he had no regrets, FWIW).
There are concerns because by default they usually cast votes by board recommendations and since they have such a huge stewardship of the stock market it means others can have more direct influence, but Vanguard itself is otherwise as neutral a stock ownership intermediary as can pretty much exist.
It’s especially sad when you read or listen to what Jack Bogle had to say. Such a thoughtful, kind and honest person who choose to help people invest rather than pocket their money. But the modern financial system is too complex for your average moron.
There is confusion on your part. Blackrock owns a number of different funds that do things like you describe (and explicitly called private equity funds).
BlackRock and State Street biggest funds are all passive and are indistinguishable from Vanguard. All 3 offer active investments, but their passive portfolio dwarfs the active ones.
BlackRock != BlackStone, if that’s what you were thinking of.
Then enlighten me about the, presumably, massive difference between BlackRock and Vanguard passive funds. It must be something so huge that they are both in the index fund/passive fund category and yet “can’t be lumped together” because it seems you’re the one who doesn’t know much.
They hold shared on behalf of other people, i.e. if someone buys one of their index funds they buy the corresponding shares. They are the on-paper owner of a very large fraction of shares in public companies, but they are a) not the ultimate owners, just agents of the real investors, and b) as a consequence very hands-off in the operation of the businessness. They in general just go along with what the company executives and other, more direct investors want. They have a general stated goal of 'encouraging long-term value for their stockholders', but the most activist thing they've done was contribute to a shuffle in exxonmobile which pushed them to pay a little bit more attention to the environment and climate change, which is if anything the opposite of what people tend to assume they do.
I mean they also send me an email to vote with my fractional S&P 500 shares whenever a shareholder vote comes up, so even if they're the on-paper owner of the shares they seem to pass through the voting rights every bit as much as the direct value and dividends.
You are probably voting for the ownership of the fund, and not the companies the fund owns. Unless you get around 500 different share holder vote forms every year you are not voting for the companies in question you are just voting for the leaders of your funds. (around 500 because S&P 500 funds often buy companies like what is in the S&P500, but not always exactly the same companies. Even if they want to be exactly the same companies they take time to buy and sell anytime the S&P500 changes just because the market could not handle them buying/selling everything the minute the S&P list changes)
Only in very high-level, abstract terms. Company executives have, especially of publically owned companies, a very large degree of leeway in how they can operate, and most corporations do have some idea of a mission beyond 'make money'.
