Why 'Passive Management' Cannot Pass The 'Fiduciary Duty' Test: Implications For Managing Retirement Savings

“During periods of market exuberance, investors gradually become willing to accept things they would normally question. Governance becomes less important. Disclosure and transparency become less        important. Accounting treatment becomes less important. Fundamentals become less important. Everybody is making money, so no one needs to ask any questions…….

With SpaceX, we have a company that will be worth $1.8 trillion at IPO with 80% voting control concentrated in the hands of one man…… For years, I have been worried that passive investing is creating distortions in capital allocation. More and more money is flowing into companies simply because they are large, not because investors have independently concluded they represent the best risk-adjusted opportunities…..

Major stock indexes are fast-tracking SpaceX’s inclusion, meaning index investors will soon be accepting the weight of a large, unproven public company into their portfolios that is controlled by a single shareholder…..

This means we have the largest IPO in history asking investors to accept weaker governance with extreme concentration of control. We also have the highest proportion of passive management that is no longer analyzing financials, questioning assumptions, evaluating governance structures, and holding management accountable when necessary. I ask you: what could go wrong?”

Anthony Scilipoti, Founding PartnerVeritas Investment ResearchPublished in The Globe&MailJune 12, 2026

Countering Andrew Coyne’s Critique of CPP Investments

In his opinion column in the May 21, 2026 edition of the Globe&Mail, columnist Andrew Coyne once again took CPP Investments to task for wasting $billions on actively managing the assets backing the Canada  Pension Plan. Our June 2026 Letter responded, pointing out that through the $777 billion CPP portfolio, CPP participants were in fact major owners of the means of production and that hence CPP Investments has a fiduciary duty to monitor the governance/management quality of the companies represented in the CPP portfolio. Further, if it identified governance/ management quality shortfalls, it would be in the interest of CPP beneficiaries to intervene. The Letter showed that through its Portfolio Value Creation (PVC) Group, CPP Investments in fact does this.