Trowel Trades S&P 500 Helps Connect Main Street to Wall Street

For too long there has been a disconnect between Main Street and Wall Street. Too often, corporations, with Wall Street’s blessing, have given their CEOs huge pay increases, severance packages, and/or pensions, while their employees were forced to make wage and benefit concessions, or worse. Through participation in the Trowel Trades S&P 500 Index Fund and the BAC Proxy Voting Service, BAC pension funds can help ensure that Wall Street stays connected to Main Street. This is done by aggregating and leveraging the proxy voting power of BAC pension funds, and using it to guide corporate policy and to educate corporations on the importance of having investments work on behalf of investors – BAC members – not against them.

How do funds exercise this power?

Increasingly, pension fund participants have been using the power they have as investors – shareholders – in companies to make sure the proxy votes their funds receive as shareholders are voted in a way that ensures solid long-term returns.

The best example of this is the Trowel Trades S&P 500 Index Fund, which is made up of a diverse group of companies that reflects the stock market as a whole, just like the S&P 500. This Fund not only offers a competitive rate of return for BAC funds, but its fee structure is significantly lower than comparable investment options.

“Prior to signing on to the Trowel Trades S&P 500, we invested in a similar fund with a large East Coast investment services company. Although the investments were similar, the Trowel Trades S&P 500 saves us considerable costs in fees and we also get to pool our money with other funds that service our Union – and that’s a good thing,” says BAC Local 18 California President Chad Boggio. Local 20 Illinois Business Manager Joe Gagliardo also appreciates the low fees of the Trowel Trades S&P 500. “The Fund works well – it’s a consistent performer and does what it sets out to do by accurately mirroring the broader market. We’ve been in the Fund for four or five years and the reduced fees are making our investments that much better,” says Gagliardo.

While a solid return and low fees are important for BAC members’ pension security, the Trowel Trades S&P 500 goes one step further to protect the members’ – investors’ – interests. It does this by voting the proxies of the stocks held through the Fund in a manner that promotes the interests of the fund participants, as well as the financial well-being of the BAC pension funds that participate. It also allows BAC members through their pension fund holdings to offer shareholder resolutions on such critical issues as who will sit on a company’s board of directors, CEO pay increases, and corporate policies geared toward preventing an “Enron” type situation that decimated the pensions of so many workers.

Investing in the Trowel Trades S&P 500 is one way BAC funds can help ensure the financial well-being of the fund and exercise their shareholder rights, signing up for the BAC Proxy Voting Service is another. This service ensures that all of a fund’s investments are working in the participants’ interest.

Does it work?

Yes. The defeat of proposals to include “golden parachute” clauses in executive employment contracts at KB Homes, Simon Property Group, J.C. Penny and YUM! Brands are examples of the positive impact that BAC funds were able to achieve through their involvement in the Trowel Trades S&P 500 and the BAC Proxy Voting Service. Golden parachute clauses create a financial drain by rewarding executives with large severance packages, bonuses, or stock options when their employment is terminated, regardless of how the company has performed under their leadership.

As a result, a growing number of BAC pension funds are choosing to invest in the Trowel Trades S&P 500 and take advantage of the BAC Proxy Voting Service so that they too can use their collective investment clout to influence corporate decision-making in ways that benefit BAC plans and members.