Strive funds are available through online brokerage firms.
Many large asset managers are redefining the purpose of American for-profit corporations by pushing companies to shift their priority from shareholders to other stakeholders – anyone potentially affected by a corporation’s actions, such as suppliers, local and national communities, and the environment.
At Strive, we reject this shift. Unlike our competitors, we are unapologetically committed to shareholder primacy and believe that the purpose of a for-profit company is to maximize long-run value to investors.
Shareholders vs Stakeholders: Past, Present, and Future
More than a century ago, Dodge v. Ford established the principle of shareholder primacy, holding that corporations have a legal obligation to act in the best interests of their investors. With shareholders in the driver’s seat, the U.S. economy took off.
Shareholder capitalism’s rewards for innovation produced the modern world’s greatest inventions, including assembly lines, airplanes, air conditioning, computers, supermarkets, cell phones, and the internet. Shareholder capitalism built the companies that built America.
Then, 50 years ago, the debate over corporate purpose was reignited. University of Chicago economist Milton Friedman convinced America to rededicate itself to shareholder capitalism while most European countries diverged and implemented stakeholder capitalism.
Historical Data Shows Shareholder Capitalism Outperforms
America and Europe not only experienced a significant divergence in ideas, but they also experienced a significant divergence in outcomes. Over the past 35+ years, American shareholder capitalism has outperformed European stakeholder capitalism by 3.25% annualized, as exemplified in the graph.
Shareholders Given a Back Seat
Despite the data, shareholder capitalism in America is at risk once again. In 2019, the country’s most influential corporations signed the Business Roundtable statement, which attempts to redefine the purpose of a corporation and explicitly reject shareholder primacy.
Everyone Feels the Impact
Fiduciaries, legally obligated to focus solely on financial returns, are incorporating non-pecuniary factors under the guise of considering environmental, social, and governance (ESG) risk factors. The Department of Labor adopted a rule making it easier for pension funds specifically to do that. At the same time, pension plans are lowering their projected long-term returns, risking insolvency.
America has a savings and retirement crisis – the average pension is under 80% funded and the average American only has a little over $100k in their 401(k) accounts. The impact of a 3.25% reduction in forward projected equity returns by rejecting shareholder primacy would be catastrophic for all investors.
The Strive Solution
We do not intend to let the economy continue down this path. We aim to increase long-run capital market realized returns and assumptions by restoring free market capitalism by leading companies to focus on excellence.
When the time comes for you to purchase Strive products and solutions for yourself, your clients, or the institution you represent, you can do so with the confidence that our sole obligation is to the financial interests of our clients and that we will always prioritize the shareholder over other stakeholders.