Liquidity may not scale proportionally with index size, meaning that when large amounts of money flow into index funds tracking large companies, those companies may not have enough incremental liquidity to accommodate those flows without significant price impact.
causalpending
Speaker
Jack ForandEvidence Quote
“liquidity might not scale with sides um and so yes the money is going into apple and Nvidia in relation to their float adjusted market cap but if their liquidity is not scaling with that properly you can get impact”
Source
Passive Investing Has Had a Major Impact on the Market: Here is What It Means for Your Portfolio— Excess ReturnsCreated: 8/11/2026, 6:34:01 AM
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