The impact of index funds has been revolutionary. When John Bogle, the founder of Vanguard, introduced the first vehicle designed to passively track the performance of a stock index about 40 years ago, it was derided as “Bogle’s Folly.” Today the fund’s successors, at Vanguard and elsewhere, hold $2 trillion in assets.
Is it too much? Does the fact that so much money is indexed — a step taken in part because it’s thought to reduce risk — actually raise the odds that shareholders will face steeper losses in the next bear market than if they owned actively managed funds?
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