Re:The Impact of Index Investing: A Follow-Up
by dragonwriter on Wednesday May 04, 2016 @02:32PM
(#11630538)
> What is the risk when a large percentage of the middle class and others are all in low fee index funds?
One risk is that index funds aren't really unmanaged, they are managed by people who set and apply rules as to what is included in the index. The greater proportion of total investment that is passively (i.e., without deep research into the practices behind the index) invested in such funds (and, particularly, the proportion that is passively invested in any one such fund), the greater the risk of the rules and practices of setting the index being manipulated.
One risk is that index funds aren't really unmanaged, they are managed by people who set and apply rules as to what is included in the index. The greater proportion of total investment that is passively (i.e., without deep research into the practices behind the index) invested in such funds (and, particularly, the proportion that is passively invested in any one such fund), the greater the risk of the rules and practices of setting the index being manipulated.