As the markets get increasingly choppy, this short piece posted on Bloomberg in May 2017 may provide some food for thought. Basically, it illustrates the growth of US Index funds. However, the point that I am making is that it's unclear how these funds will react in extremely volatile markets where, at least in the US, there are a small number of very large cap stocks. I would suggest that there may also be counterparty issues that will only come to light in a crisis. The sheer size of the Index market could be adding to market volatility. Incidentally, if we are heading into a major correction then this will be the first time, from what I can understand, that we do so with more US Index funds than US stocks. And I am not sure whether retail investors grasp just how complex and convoluted this sector has become.

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