I'm sorry but I don't understand what you are getting at. Besides index funds not being impacted by algorithm trading that much, the author of that article also notes that trading stock doesn't to much to allocate capital anymore, like it used to. They get some money at ipo, but after that most companies aren't selling stock to get more capital for expansion. I think we would be better off without the financial industry taking a pointless large cut of the economy, and reducing their stake at least seems sensible.

No?

> Are Index Funds Communist?

> But when those thoughtful active analysts are replaced with passive index funds, the market stops serving that function.

> Indexing is cheaper, yes, but that's because active management has positive externalities, and if no one will pay for it, those benefits will disappear.

> But more fundamentally, there is an alternative view that the rise of passive investing will improve capital allocation

> The passive investors can't influence relative prices

> Their worry is that the growth in passive and quasi-passive products

> Or I guess pure indexing -- everyone passively throws money at everything that there is, with no judgment at all -- is an imaginable fourth answer, and is strictly worse than the others.