A decade ago John Green complained that index funds were worse than Marxism.
About the same time, Matt Levine and others joked that index funds are violating anti-trust legislation... since they all own the same company, they are (passively?!) incentivized to engage in collusion and anti-competitive behavior, since one portfolio company competing away profits from another is, on net, bad for their combined shareholder. Nobody did, and there was no evidence or indication that BlackRock and State Street and Vanguard tried to influence boards to behave a certain way.
...until the environmentalism crazy went overboard. Now they did.
it seems broadly true that, for a while, several big asset managers had a general view that their portfolio companies should reduce their carbon emissions. “Climate risk is investment risk,” BlackRock Chief Executive Officer Larry Fink wrote to his portfolio company CEOs in 2020, and — back when he believed that — it was a systemic risk across all companies.
post-ESG, that shit is now illegal...ish. Texas is suing, and using exactly these arguments. Index fund managers colluded to defraud American consumers! Of course, there's still not much of a smoking gun and who knows if it'll stick but eh, at least the schmucks are getting a bit of a pounding.
Beautiful to see.
"Now it appears to be the official policy of the US government that index funds, at least sometimes, cause the public companies they invest in to reduce competition."
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