Big tech’s dominance is straining the logic of passive investing

“Don’t look for the needle in the haystack. Just buy the haystack!” So wrote Jack Bogle, who founded Vanguard Asset Management in 1975 and brought index investment to a mass market. Subsequent decades proved him right. “Passive” strategies that track market indices, rather than trying to beat them, now govern nearly a third of the assets managed by global mutual funds. Since a stockmarket index weighted by company size is just the average of underlying share owners’ performance, it is impossible for investors, in aggregate, to beat it. In the long run, even professional fund managers do not.