Has the rise of passive investing damaged the inventory market? Is the extent of passive possession too excessive? No. There isn’t a robust purpose to imagine that increased indexing degrades market effectivity. What issues are the non-passive traders: Are there sufficient of them, have they got the correct incentives, are they in a position to categorical their views through buying and selling? What doesn’t matter are the passive traders: They’re just like the viewers in a play; they only watch the exercise on stage. There isn’t a degree of passive possession, aside from 100%, that clearly causes the market to be dysfunctional.
