Vanguard Is Growing Faster Than Everybody Else Combined
With index funds so big, who determines prices? An index fund tied to the S&amp;P 500 just buys stocks in the proportion that they&#x27;re in the S&amp;P 500. The price of the stock plays no role in that decision. At some point, this has to create problems, but so far it hasn&#x27;t. It does mean the active traders, who are basically moving the same money around all day, have an outsized influence on prices.<p>Index funds are so successful because managed stock funds, as a class, underperform the market indices.  So do hedge funds, which are a net lose for their investors. People are finally aware that Wall Street&#x27;s stock pickers mostly aren&#x27;t very good.