FYI: It’s even got a cute nickname: peak indexing.
The theory—discussed, for instance, in this excellent Bloomberg interview with John Bogle recently, or in this great exchange on “peak indexing” at Abnormal Returns—goes like this: As more and more of the market is indexed, herd-buying mentality will distort market prices. This will create the perfect opportunity for active managers to pounce, finally delivering the kind of outperformance that has eluded them for the past 20 years or so.
Regards,
Ted
http://www.etf.com/sections/blog/hougan-index-investing-growth-wont-help-active-managers-outperform
