Good to have substantiation and support for something we’ve been saying since the early 1980’s.
Our key insight is that although index funds are locked into their investments, the shareholders who invest in these funds are not. Like all mutual fund shareholders, investors in index funds can exit at any time by selling their shares and, when they do so, they receive the net asset value of their ownership interest. Moreover, because mutual fund inflows are driven by performance, passive investors risk losing assets if their returns lag those of actively-managed funds on a cost-adjusted basis. As a result, passive investors must compete for investors, and, because they cannot exit, they compete through engagement.
Source: Passive Investors