Vanguard and other index providers choose market-cap weighting for bond indices because it is 'easy to explain,' not because it is theoretically optimal; but this choice is now influencing outcomes at the political level (Fed policy, government decisions) because passive flows are large enough to move markets.
causalpending
Speaker
Mike GreenEvidence Quote
“Vanguard will be very straightforward. If you ask them outright like why would you possibly wait a bond index on the basis of market capitalization? They'll say it's very simple. It's easy to explain...but that's the crux of my point is now you actually are suddenly you've grown to a scale that you're influencing outcomes at the political level that might actually affectuate change.”
Source
The Trillion Dollar Trap | Mike Green on Passive Investing's Fatal Design Flaw— Excess ReturnsCreated: 8/11/2026, 5:27:10 AM
My Notes
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