(from the article)
> "The arguments for passive investing have been well-documented"
No, the evidence for passive indexing is well documented. The facts, not arguments. SPIVA has an excellent methodology for tracking performance, and in their data the S&P 500 beats 90% of large cap actively managed funds.
https://us.spindices.com/documents/spiva/spiva-us-year-end-2017.pdf> "Research has shown that the repercussions of such a profound shift could be dramatic"
What research? This is the key point of the article, and no follow up is provided on this claim.
> "the big are definitely getting bigger."
The claim is that S&P 500 indexing causes this. But passive investment is proportional to size. When money flows into an S&P 500 index fund, the 500th largest company receives the same percentage boost as the largest company.
Actually my experiment in another thread has a better explanation for this than they do: tech stocks. The Vanguard Information Technology ETF (VGT) is the best performing ETF in all of Vanguard over the past year. A better explanation for the big getting bigger is that already big tech companies are getting even bigger.
> "As money flows into passive index funds, it trickles down to the largest companies first -- companies like Apple, Microsoft, Amazon, and Facebook."
When you see "Apple, Microsoft, Amazon and Facebook"... does that sound more like large companies in the S&P 500, or more like tech companies? Also, as I understand it, index funds buy companies at the same time - they do not buy "the largest companies first".
I guess I could go on picking apart the article, but my main point is this: given the chance to use historical performance to support their idea, they didn't. SPIVA's data shows that the S&P 500 index continues to beat large cap funds, and the longer the time frame the higher the percentage of funds it beats.
https://us.spindices.com/documents/spiva/spiva-us-year-end-2017.pdf