[xyzelement]

I am probably deeply biased, having spent decades in finance including massive funds, but I'd like to think you're wrong.

On the most simple level - ETFs and passive investments only work because they "invest along" with the rest of the market. With the rest of the market being the active investors, of which the large institutional ones make the most impact.

If they weren't there - then the passives would stop working. The dynamics take a while to visualize but think about the word - passive implies you're following someone who's active. My metaphor for this is water-skiing. The water-skier is MUCH more efficient than the boat that's towing them. However it would be wrong to think that the world would be a better place if everyone just had the skis and nobody had boats - w/o boats, the people are back to having generate their own energy (trading ideas/analysis) and we're back in the worse spot.

Then - on the very concrete level - there's a LOT of state teachers, firemen, policemen, etc. that are able to give their pensioners the what they promised them only because they made wise investments in funds that worked their asses off to provide returns required for that.