The finance industry has historically been adept at inventing new products that line its own pockets more than those of Main Street. The index fund is a rare exception to the rule. At a time when the gap between the haves and have-nots is widening everywhere, the positive impact that an initially much-maligned invention by a motley group of self-described finance industry renegades and heretics can have in the space of a few decades is inspirational. Nonetheless, new technologies — and that is essentially what the index fund is — always have side effects, and not all of them are positive. As index investing has grown, the initially snide comments have been replaced by concern, even fear. Over the past decade, it has become a crescendo. Paul Singer, a famous hedge fund manager, even argues that passive investing has grown into a “blob” that is now “in danger of devouring capitalism.”
