no. it’s true that actives get some mechanical echo from index flows. but since that’s unrelated to the quality of their decision-making, it’s noise. 1/

where actives do have information to contribute, this “leverage” means they have less opportunity to exploit. 2/

so it’s quite different from private leverage, which might fund trades by which they’d try to accumulate positions with as little price effect as possible. this “leverage” erases the opportunities it funds. 3/

sure, (relative) price discovery happens, the stock finds its (relative) level, faster than it otherwise might. 4/

but that is not to the advantage of the informed investor. /fin