Has the Rise of Passive Funds Really Broken Markets?

Recent data from Morningstar showed that at the close of 2023, assets in passive funds had overtaken those in their active counterparts. This was a moment of celebration for advocates of passive investing, but also came against a backdrop of active investors – most notably hedge fund manager David Einhorn – claiming that this shift had broken markets. So, is the continued growth of passive funds simply validation for a better way of investing, or terrible news for the efficient functioning of capital markets? ….[READ]