Retirement savers finally get a vote in companies they own through index funds
S. 1670 — INDEX Act · Filed by Dan Sullivan (R-AK) · 9 cosponsors · Introduced May 8, 2025 · Referred to committee
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What it does
This bill requires investment advisers managing passive index funds to pass through shareholder voting rights to the fund's actual owners—the people whose money is invested—rather than voting those shares themselves. When an adviser controls more than 1% of a company's voting power through passive funds, it must collect voting instructions from fund shareholders and vote proportionally according to those instructions, with limited exceptions for routine matters and situations where instructions aren't received in time.
Why we flagged it
The bill's core mechanism transfers voting authority from passive-fund advisers to the beneficial owners of those funds, restoring direct shareholder participation in corporate governance. This is fundamentally about democratic participation in capital markets, not a market-manipulation or deregulation play.
What the text implies
- Passive index funds (which hold trillions in U.S. retirement savings) will face significant operational and compliance costs to solicit, track, and aggregate voting instructions from millions of dispersed beneficiaries, potentially raising fund fees.
- Investment advisers lose de facto voting power over portfolio companies, which may reduce their influence in corporate governance and their ability to coordinate voting across funds.
The full analysis lists 4 implications of this text.
Who it affects
Ordinary investors—retirement savers, 401(k) holders, and fund participants—gain direct voting power over companies in which they own shares through passive funds, restoring democratic participation in corporate governance that was previously exercised by advisers without consulting them. This strengthens shareholder voice and accountability without imposing costs on citizens.