I saw this article about the growth and growth of vanguard:
http://www.ft.com/cms/s/0/c54941ce-0b22-11e4-ae6b-00144feabdc0.html#axzz37UNB0xhzAnd it got me thinking about concentration. Most people here are followers of the low cost index approach, and I believe users of Vanguard. With Vanguard controlling approx $2.1T in assets, and a global market cap of approx $50T (world bank), that would suggest that Vanguard has control over approx 4% of global capital. (nb- I don't know if I'm comparing apples with apples here, as I'm not sure if bonds are included in one or both, but the point remains, its a few percent of global assets).
At what point does this start becoming a systemic risk? Vanguard gets a lot of praise for many reasons (and I use them for much of my investment), but as pointed out, some issues are a bit hazy - such as remuneration etc. Perhaps the thing that plays most on my mind is the role of shareholder voting in corporate governance - i.e. if the board is being too mis-aligned with shareholders interests, shareholders can vote for change.
Anyone have any thoughts on what level (percentage) of passive investment becomes a systemic market risk, through corp governance?