I’m admittedly a passive investor, with 100% of my retirement savings invested in index funds, but this article in Slate, ostensibly about Facebook’s impending IPO, was the first I’ve read that expressed a downside to emerge from index fund investing: ineffective corporate governance.

On some level, this is how investing already works today. Actively managed mutual funds are a bad deal for investors, as are hedge funds and private equity funds. But if you invest in broad indexes as most people think you should, then by definition you’re abandoning any ability to exercise control over the companies you nominally “own.”

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