One Cause of Market Turbulence: Computer-Driven Index Funds<br />In many ways, this stampede toward passive investing — in which people put their money into funds<br />that track indexes and broader market themes as opposed to relying on human stock pickers — is uncharted territory.<br />After propelling the market to historic highs, passive investment strategies — which follow a simple set of rules<br />and are carried out by sophisticated computer programs, not humans — are among the factors fueling the market’s recent plunge.<br />market — its robots buying stocks just as they were programmed to do,” said Steven<br />Bregman of Horizon Kinetics, a firm that hunts for undervalued stocks.<br />The popularity of E. T.F.s has concentrated unparalleled financial power in BlackRock<br />and Vanguard, the two biggest providers of index funds and E. T.F.s.<br />This week, as markets shuddered, exchange-traded index funds were responsible for 38 percent of total stock<br />trading on some days, an astonishing figure given that these funds were just a curiosity 10 years ago.<br />Earlier this week, they were big sellers when the so-called VIX index — a measure of anticipated market volatility — skyrocketed<br />Martin Small, who oversees United States-based E. T.F.s at the firm, said the high share of E. T.F.<br />But as the market fell and trading in BlackRock funds accelerated, there was little sign of panic or emotion among the E. T.F.
