[Saccharine1]

I think there are a handful of problems with this post, one of them being that index funds are already in many ways "open source." Re: their investment choices the investments that go into an index are chosen by the creator of the index which is separate from the investment house. The investment company MUST simply follow the index and trade as the index indicates. The tracking accuracy may vary slightly between Vanguard, Blackrock, and others, but generally they're all tracking accurately using basically the same methods. Any investor can move their shares to any other investment house at any time.

Also each investor already owns their portfolio outright... it is simply housed at the investment company. There is an absolute avalanche of regulation making that not just desirable but necessary. To remove a brokerage house from this equation would first require the complete and utter destruction of the global economic system (highly unlikely).

Every investor has the ability to choose funds crafted based on moral guidance or active management, which would spread out voting power more than it currently is. People are by and large not choosing that option at the moment.

[Digory]

Isn’t one of the concerns that index funds are supposed to mimic the index’s returns, but absolutely aren’t required to track the index holdings?

If absolute rebalancing was required in an S&P 500 index fund, there would not be enough liquidity in the market for some of the smaller of the 500.

It’s all been fine and well during a bull market, but a concern is that “index” funds have huge amounts of synthetic holdings that are untested in a rout.