The surging popularity of index funds—and the corresponding exodus from actively managed funds—is a worrisome trend for Wall Street. And so the bankers and brokers and analysts have responded with dire predictions. The warning goes like this: as use of passively managed index investing grows, market prices will become distorted as fewer shares are traded and “price discovery” becomes more difficult. That’s bad news for markets and investors too. Should you be concerned? Let’s look at the evidence after reviewing Q1 quarterly returns.