Indices driving asset inflation has pretty much been debunked:
If it was true we should se a cliff in valuations compared to profits between S&P500 and 501-1000. But there is none
It also makes no sense. When markets become less efficient (which would be the case from index distortion) the incentivization to arbitrage these inefficiencies away becomes greater.
index ETFs are insignificant for price action compared to active hedge funds or banks moving in/out of individual stocks.
Indices driving asset inflation has pretty much been debunked: