Has the rise of passive investing damaged the inventory market? Is the extent of passive possession too excessive? No. There isn’t any sturdy motive to imagine that greater indexing degrades market effectivity. What issues are the non-passive traders: Are there sufficient of them, have they got the appropriate 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 simply watch the exercise on stage. There isn’t any stage of passive possession, apart from 100%, that clearly causes the market to be dysfunctional.
