i assume you mean passive index investing (via the instrument called ETF).
And no, it won't eliminate price discovery unless there's some 80-90% of the transactions that is only passive. And if that's the case, an enterprising active manager would spot this discrepency, and profit from the abitrage.
So in effect, passive investing is piggy-backing off the price discovery of active managers, and this reaches a balance.
i assume you mean passive index investing (via the instrument called ETF).
And no, it won't eliminate price discovery unless there's some 80-90% of the transactions that is only passive. And if that's the case, an enterprising active manager would spot this discrepency, and profit from the abitrage.
So in effect, passive investing is piggy-backing off the price discovery of active managers, and this reaches a balance.