If you own a mutual fund, then you do not own shares of the 500 companies, rather you own shares of the mutual fund itself.
Consequently you don't put pressure on the 500 companies, you put pressure on the mutual fund and the mutual fund in turn puts pressure on the companies it invests in and exercises additional discretion in which companies it invests in.
>Perhaps it’s on Vanguard to do so…but Vanguard isn’t going to just eat the cost of increased due diligence requirements.
Yes they do, because mutual funds do compete with one another and a mutual fund that does the due diligence to avoid investing in companies that are held liable for these kinds of incidents will outperform the mutual funds that don't do this kind of due diligence.
> It’s not like I or Vanguard can see internal processes to verify that a company has adequate testing or backups or training to prevent cases like today’s failure.
I don't know specifically about Vanguard, but mutual funds in general do employ the services of firms like PwC, Deloitte, and KPMG to perform technical due diligence that assesses the target company's technology, product quality, development processes, and compliance with industry standards. VC firms like Sequoia Capital and Andressen Horowitz do their own technical due diligence.
Consequently you don't put pressure on the 500 companies, you put pressure on the mutual fund and the mutual fund in turn puts pressure on the companies it invests in and exercises additional discretion in which companies it invests in.
>Perhaps it’s on Vanguard to do so…but Vanguard isn’t going to just eat the cost of increased due diligence requirements.
Yes they do, because mutual funds do compete with one another and a mutual fund that does the due diligence to avoid investing in companies that are held liable for these kinds of incidents will outperform the mutual funds that don't do this kind of due diligence.
> It’s not like I or Vanguard can see internal processes to verify that a company has adequate testing or backups or training to prevent cases like today’s failure.
I don't know specifically about Vanguard, but mutual funds in general do employ the services of firms like PwC, Deloitte, and KPMG to perform technical due diligence that assesses the target company's technology, product quality, development processes, and compliance with industry standards. VC firms like Sequoia Capital and Andressen Horowitz do their own technical due diligence.