Re:Half of US stock fund assets are now invested in index funds
by OscarCunningham on Tuesday May 28, 2019 @09:52AM
(#20029972)
Where would those returns for active investors come from? They're still playing a zero-sum game amongst themselves.
Re:Half of US stock fund assets are now invested in index funds
by skybrian on Tuesday May 28, 2019 @12:24PM
(#20031633)
Seems like it's more complicated than that? Index funds do buy and sell sometimes, as some investors move money into and out of index funds. There are also dividends and stock buybacks.
As the proportion of active investors in the market falls, those that remain enjoy a greater advantage. There will therefore always be some minimum threshold of actively managed assets (due to the marginal returns from active management eventually exceeding the marginal fees).
It's an open question as to what this threshold might be, but it will certainly be orders of magnitude above what you describe.