[chkdsk]

As of October last year Index Fund investors still represented less than 18% of the global stock market:

https://www.reuters.com/article/us-funds-blackrock-passive/l...

I'd hardly call that "eating the world alive." The only thing its eating so far is the absurd wealth management fees old school financial advisors used to make.

Also there's about 200 different indexes all slicing up the marketplace in various ways. Not every investor is buying the large cap, cap-weighted index (although most are).

Ultimately, this idea of passive "distorting" the markets just isn't true (also I'm not sure what you mean by "earnings profile"...earnings are set by consumer demand for a company's product, not investor demand for company stock). Active traders set prices, indexes simply follow the prices set by active traders. We are no where near the point where distortions would happen, and if we ever got to that point, there would be massive incentive to profit off of a easily predictable mispricing.