Big Index Funds Need to Be Passive, Not Political: Editorial

The rise of index funds has provided millions of Americans with a cheaper and more efficient way to invest. With more than $23 trillion in assets between them, BlackRock Inc., Vanguard Group Inc. and State Street Corp. have become the top shareholders in many US-listed companies.

That power has attracted critics ranging from Senator Bernie Sanders to the late Charlie Munger. Increasingly, the companies’ stakes in banks and energy utilities have gotten so big that they’ve triggered regulatory concerns. Policymakers now must tread a fine line: protect the immense value created by index funds while ensuring these companies aren’t abusing ...