[stouset]

> By definition market makers are earning a fraction of the price improvement they provide

By definition, they’re making in aggregate essentially whatever the difference was between the “misprice” and the “true price”, assuming sufficient belief in both of these things. One of the parties in the hypothetically mispriced trade is bearing the loss. Their cut had to come from somewhere.

> As an index investor you should absolutely care! How do you think you are able to buy into the fund at a reasonable price?

You are relying on an interpretation of “reasonable” to intuitively mean “cheap” when in reality it means “accurate” in this context.

As an index investor, as long as it is accurate enough I don’t care. Any mispricing of assets up and down will come out in the wash.

Index funds existed well before HFTs were endemic. I have seen zero evidence that HFTs have caused index funds to net more of the gains from their underlying indexes.