Should Mutual Funds Be Made Illegal?

Index funds are a darling of regulators and commentators because they seem like a victory of the common man over Wall Street scheming: Index funds are available to everyone, cheaper than Wall Street's preferred complex financial products and tend to perform better. But Posner and Weyl explicitly concede that restrictions on mutual fund diversification will hurt investors; they just argue that the benefits to consumers from more vigorous competition will outweigh those losses: