Is Passive Investing Creating A Bubble?
As index funds attract trillions, several outlets have voiced concern that a passive investing bubble could be forming.
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Is one of the most popular investing strategies quietly distorting the stock market? As index funds attract trillions, several outlets—including Barron’s and Harper’s Magazine—have voiced concern that a passive investing bubble could be forming.
The core argument is that too much money is chasing too few stocks. Passive investing—through index mutual funds and exchange-traded funds (ETFs)—has become so dominant that it funnels an enormous volume of investor capital into a shrinking pool of mega-cap names such as Apple, Microsoft, Nvidia, Amazon, and Meta, for example, which often sit at the top of…
