AAPL is a good chunk (12-15%) of technology index funds like IYW, XLK, FTEC, VITAX. But I don't think the concern is one of sector funds taking over the market. In broad based indexes like the S&P 500, AAPL represents about 3%. Would people sell an investment that they were 97% happy with just because they didn't like how the other 3% was being run? I'm more skeptical of that than you are.
But for the sake of argument, let's grant that people would bail on the S&P 500. Then all 500 CEOs would be punished for the sins of one. This may move prices of the whole market, but it's not an effective way of holding AAPL's management accountable - hitting a gnat (albeit a large one :-)) with a sledge hammer.
Going off on a slight tangent - I agree that some index funds are not robotic market participants. Some funds have the flexibility to buy and sell when prices are more to their advantage, as opposed to trading instantly when an index reconstitutes. To that small extent they can act to stabilize prices. This still doesn't help send a message to management, but it can move prices (a little).

I had exchanged posts with Mr Snowball on SCMFX. It seemed overrated to me.

What were you looking at when you made the selection?
A quick look at it Vs the RUT showed that over 10 years they were about equal and over 5 years SCMFX underperformed RUT
http://finance.yahoo.com/chart/SCMFX#eyJjb21wYXJpc29ucyI6Il5SVVQiLCJjb21wYXJpc29uc0NvbG9ycyI6IiMxYWM1NjciLCJjb21wYXJpc29uc0dob3N0aW5nIjoiMCIsImNvbXBhcmlzb25zV2lkdGhzIjoiMSIsIm11bHRpQ29sb3JMaW5lIjpmYWxzZSwiYm9sbGluZ2VyVXBwZXJDb2xvciI6IiNlMjAwODEiLCJib2xsaW5nZXJMb3dlckNvbG9yIjoiIzk1NTJmZiIsIm1maUxpbmVDb2xvciI6IiM0NWUzZmYiLCJtYWNkRGl2ZXJnZW5jZUNvbG9yIjoiI2ZmN2IxMiIsIm1hY2RNYWNkQ29sb3IiOiIjNzg3ZDgyIiwibWFjZFNpZ25hbENvbG9yIjoiIzAwMDAwMCIsInJzaUxpbmVDb2xvciI6IiNmZmI3MDAiLCJzdG9jaEtMaW5lQ29sb3IiOiIjZmZiNzAwIiwic3RvY2hETGluZUNvbG9yIjoiIzQ1ZTNmZiIsInJhbmdlIjoiNXkifQ==

From the article: "Index funds don’t set prices; they only accept the prices that active investors have already set." Is this true? Doesn't it assume that index mutual fund and ETF investors are as robotic and passive as the funds themselves? But that is not true. If for instance Apple has a good or bad earnings report index fund investors--financial advisers, pension plans and retail investors--are going to react to that, buying or selling more shares of the index funds. Yes, index funds are passively run, but that isn't necessarily the case at all for the investors in index funds who adjust their exposure to index funds based on macro and micro-economic information. And considering that the largest 100 companies account for 45% of the entire market cap of all stocks in the U.S., it isn't so hard for index fund investors to react to new information regarding those specific companies. So I think it is quite possible for fund shareholders to set prices at those companies.

After reviewing all available options, we chose Iowa 529 plan that uses a host of Vanguard index funds. The choices are either age-based or individual portfolio. We are very happy with the age-based portfolio and its return for the past 15 years. By the way, we skipped our home state, Oregon 529. The state administrator consistently picked poor fund families that run the plan. First it was the Strong, then came Oppenheimer, and now TIAA-CREF. Even with state tax deduction, we decided to forgo the incentive and went with Iowa's plan instead.

Would there not be increased exposure to the real estate sector now that it is in the S&P? Index funds and 401/403's will have to oblige.

I wonder how many people believe the statement in the article: "[index funds] own[] essentially all the stocks or bonds in a market basket all the time."
Index funds tracking indexes that are limited to large, liquid securities do tend to use full replication. But even funds with massive AUMs like VTSMX use sampling to deal with smaller issues. Then there are commodity index funds that use derivatives, currency hedged index funds, enhanced index funds, etc.
Vanguard: "[We] vote to the sole benefit of our mutual-fund shareholders."
Been there, done that.
http://mutualfundobserver.com/discuss/discussion/28910/lewis-braham-vanguard-s-climate-change-dismissal
For those who think that Vanguard should not be "hugging trees" but should be paying attention to basic dollars and cents, there's Vanguard's voting record on compensation:
- Vanguard supporting CEO compensation plans in 97% of votes (Bloomberg, 2016)
http://www.bloomberg.com/news/articles/2016-02-17/vanguard-blackrock-seen-seldom-challenging-companies-on-ceo-pay (97% of votes for CEO pay - 2016 report)
- Vanguard tops list of excessive CEO pay enablers (AFSCME study, 2011)
Ultimately, though, I feel that the problem in holding corporate management accountable is not limited to index funds. Fund management companies either care about how companies are run or they don't. If they do, they'll act accordingly regardless of how they own stocks in companies (actively or passively).
Market pricing is another question. There, ISTM that Bogle is right - until index funds own virtually the whole market, it's not a problem. Index funds may be somewhat like market orders in that they must accept whatever's out there. But limit orders would still control pricing. So long as there were enough limit orders that the "collective wisdom of the marketplace" could come through, the actual percentage of index ownership wouldn't matter.

FYI: If he is using a college savings plan in New York, Pennsylvania or Iowa, his funds get an A. If he has chosen South Dakota or West Virginia, though, he might want to take a year and learn about the wonders of the workforce
Regards,
Ted
http://www.investmentnews.com/article/20160825/FREE/160829961/what-grade-does-your-states-529-plan-get
Saving For College.Com:
http://www.savingforcollege.com/

@davidmoran No, not all gold related; but it sure has helped YTD, eh? @Junkster You're still covered with your prior assumption of PRPFX. It's having a "day in sun" from the choices in place at this time. Most of us here all have our "geez" moments about the ones that got away. Multiply by years of investing and the positive compound returns, over and over; and one could buy their own private island or whatever, eh?
PRPFX = 5 year return rate at 1.1%
Most here understand the market cycle sector benefits or downfalls of this type of fund.
Looking at the composition (below link); one finds gold in various forms, real estate and appears to be long term gov't. bonds; among other.
I'll pick a few simple and readily available choices if one really had their act together at the start of 2016 to look like the smartest one around for many miles. 'Course these may all go into the ground within the next year and cause one to look like a real buy and hold dumbbell, too.
YTD's for the following:
---GDXJ = +135.2%
---GDX = +98.1%
---GLD = +24.2%
---EDV = +24.1%
---IYR = +11.2%
---LQD = +10.4%
Hey, make your own list based upon what you find in PRPFX, but don't forget to sell at the proper time to lock the profits.
PRPFX composition.
@VintageFreak Apologizes for perverting your original questions.
Take care,
Catch

"Demand for REIT stocks and REIT exchange-traded funds will likely increase, if only from passive index funds that are linked to the S&P 500. The financial sector will drop to about a 12.7% weighting in the S&P 500 from 15.7%."
I'm not sure I understand how this would happen. Shouldn't any passive index fund linked to the S&P 500 already have all those stocks? It seems like the massive amounts of money in passive investments shouldn't change much and that any new demand might be more likely to come from active funds or individual investors who start paying more specific attention to real estate.

FYI: Even the father of passive investing has warned of the potential for 'chaos' if index funds get too popular.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2016/08/26/are-index-funds-eating-the-world/

FYI: Below is an updated look at our asset class performance matrix using key ETFs traded on US exchanges. For each ETF, we show its performance this past week, month-to-date, and year-to-date. As one might be able to surmise, there really hasn’t been much in the way of major moves this month across the spectrum of our Asset Class Matrix. In fact, just eleven of the 58 ETFs shown are up or down more than 2%. Two of the biggest losers this month have been Telecom Services (-7.6%) and Utilities (-5.7%). These are generally considered ‘safe’ areas of the market, but ironically enough, have been some of the most volatile in a month lacking any volatility at all. On the upside, oil is up over 12%, and along with it, the Energy sector ETF is up just under 3%.
Regards,
Ted
https://www.bespokepremium.com/bespoke-report/the-bespoke-report-82616/

SCMFX What is there to like about a fund that has significantly underperformed its category YTD, 1 Yr, 3 YR, and 5 Yr ?? SEEDX isn't much better. One common refrain (excuse) when investors hold underperforming funds is it's for diversification purposes. However, in the spirit of fair disclosure I use to rag on holders of PRPFX a dog of a dog the past many years and now look how superbly it has performed this year. So what do I know? Not much - which is about as much as all the so-called experts out there.

That's correct.
Rexx:
https://finance.yahoo.com/quote/rexx/financials?ltr=1
http://www.investopedia.com/articles/investing/072815/oil-companies-near-bankruptcy.asp --- says REXX to fall; this was over a year ago. Still. So I could lose $3500 more.
Locations:
http://www.streetinsider.com/Corporate+News/Rex+Energy+(REXX)+Updates+on+Moraine+East,+Appalachian+Basin+Operations%3B+BSP+Elects+into+Additional+Wells/11758150.html
So I dunno. They just completed a big sale in Illinois. I am not buying more.

I hold some Schwab 2030 TDF (SWDRX) and have been happy with it's performance over the years. However, YTD performance has fallen off sharply (91st percentile). I'm not panicking yet, but does anyone have any idea of what might be going on this year?

@Davidrmoran Three factors to consider with energy stocks now:
1. Balance sheet strength--those with least debt or manageable debt with distant maturity dates will survive.
2. Marginal cost of production.
3. Geopolitical risk of well locations.
Many energy stocks are over-levered so even if their common stock shares seem cheap, they will be worthless in a bankruptcy as the debt holders get everything.

Well, somebody's been buying for the last couple of years. Is all of that you, David?

@Ted 's transcription is correct. But I doubt any MMF ever grows weary of rolling over paper. To paraphrase GEICO, if you're a MMF, that's what you do.
Rather, given the rate of outflows, prime MMFs are likely wary of rolling over paper into new three month holdings. As the WSJ writes:

Because prime funds are afraid of facing even stronger outflows after Oct. 14, they’ve been weary of stashing their money in assets that mature after that.

"Weary" is repeated, so it's not a typo. In the WSJ. Is nothing sacred?

The proposal doesn't do away with paper. It just makes paper opt-in, rather than opt-out. Even if you've chosen electronic, it would require funds to send a printed version at no cost on demand, within three days of your request.
The proposal doesn't require funds to even offer electronic versions, let alone make them the default.
@hank 's got the right link. The part of the doc pertaining to the paperless proposal (a new Rule 30E-3) starts on p. 149. What's there is a clear discussion of the background, the thinking, and how the rules would work. That is, English as opposed to actual legalize text of the proposed rule.
The Bloomberg article cites Roll Call as estimating the potential savings at $2B/decade. According to the SEC report, the savings are way less than that. Total printing costs are about $116M, and given the number of funds/investors expected to participate, the savings on printing would be about $105M/year. Offsetting that are new costs (maintaining web site, mailing paper copies on demand, etc.) totaling about $32M/year.
Net savings/decade (my calculation) = ($105M - $32M) x 10 = $3/4B.
IMHO the real savings are in costs to the environment - trees (as mentioned in Bloomberg), energy for paper recycling (or landfill), and mailing/shipping (fuel).
You can find the comments that people (and companies) have submitted here:
https://www.sec.gov/comments/s7-08-15/s70815-123.pdf

FYI: Charles Schwab Corp. has upped the ante in the push to be the lowest-cost provider of target-date retirement funds, launching a new series of target-dated mutual funds on Thursday that edge out Vanguard Group and Fidelity Investments to claim the title as cheapest on the market to date.
Regards,
Ted
http://www.investmentnews.com/article/20160825/FREE/160829963?template=printart

FYI: Prime money funds will be weary of rolling over commercial paper and certificates of deposit a month ahead of the new U.S. regulation being enacted.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2016/08/24/why-money-markets-should-be-expecting-a-bumpy-september/