Meanwhile, $409 billion has poured into passive, or index, funds that seek to match the market rather than beat it. Index funds don’t set prices; they only accept the prices that active investors have already set. If everyone owned index funds, he says, “no one would be doing” the job of figuring out what securities are worth. On a typical day, only 5% to 10% of total trading volume comes from index funds, says a Vanguard spokesman. Though there are no clear harms yet from index funds, the rhetoric against them will keep escalating.

Source: Wall Street Journal August 26, 2016 15:46 UTC