Index investing is revealing the flaws in our model of shareholder capitalism

Index investing - buying tracker funds - has revolutionised equity investing. But it’s not without its problems. John Stepek looks at how “semi-detached” share ownership can distort capitalism – and how to fix it.

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Big fund players like Blackrock should take a tougher stance on problems such as high CEO pay
(Image credit: © 2018 Bloomberg Finance LP)

Now that investors have embraced the idea of tracking the market rather than paying someone a lot of money to try to beat it, there are a lot of people trying to find fault with the shift to indexing.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.