Passive investing will eventually hit a cap where it becomes counterproductive, because if too few active investors are searching for bargains, the magnitude of mispricings will grow large enough to attract active capital back and make active management profitable again.

Information technology and ease of trading removed friction that historically locked investors into underperforming active funds, allowing real-time performance comparison and quick capital reallocation to passive alternatives.

Most retail investors don't want to actually bear timing/selection risk and prefer to allocate to passive because despite intellectually understanding they could do better, they lack the conviction or time horizon to execute active strategies.