BlackRock (BLK  )and Vanguard, the world's two largest money managers, are estimated to be under a decade away from managing 20 trillion dollars. Presently, they manage over 10 trillion. Once they hit the 20 trillion mark, the asset management industry will reach a significant milestone, and questions about the principles of market efficiency and corporate governance will play themselves out with greater clarity. Government scrutiny of BlackRock, Vanguard, and State Street will no doubt increase. The two firms are major holders of companies like Alphabet Inc. (GOOGL  ), Facebook Inc. (FB  ), and Wells Fargo and Co (WFC  ).

According to CEO of Vanguardm Jack Bogle, too few firms are now in charge of too much money. Together, BlackRock, Vanguard, and State Street Corp (STT  ) own major stakes in the largest U.S. companies, amounting to roughly 20%. Furthermore, research has shown that passive indices often reflect market distortions and bubbles.

Vanguard is set to increase its holdings to over $10 trillion by 2023, with BlackRock reaching that point by 2025. The increases reflect the bullish stock market, which has caused a shift towards investment products. This bullishness may be short-lived, however. BlackRock and Vanguard appeal to the majority of investors as low-cost funds that also offer "breadth" of offerings. Exchange traded funds are traded at high levels by these firms, increasing their profitability at the current moment. The trend of high levels of ETF trading is predicted to continue.

Passive exchange-traded funds (i.e. funds that track indexes, as opposed to human portfolio managers) drive demand for securities within existing benchmarks, instead of having that demand distributed over "the broader universe of stocks and bonds." Benchmarks are established with rules and selection methodologies in place, as well as size and/or liquidity requirements. The attention given to the former class of securities sets them apart from similar, "un-indexed" assets. This distinction may create "bubbles and volatile price movements."

The popularity of the passive investing approach is due to professional portfolio managers' failure to outperform passive funds. Furthermore, the latter tends to be cheaper, resulting in a widespread movement to shift money into exchange-traded funds, and out of human managed ones. Presently, more indexes exist than U.S. stocks.

Yet, according to a co-founder of BlackRock, Barbara Novick, if stock prices sway too far out of sync, stock pickers will be able to select winners more easily, shifting the odds back in their favor and potentially triggering money flow back out of passive strategies.

Fortunately, there is evidence that the U.S.'s 37% of passively managed assets still does not place it at a tipping point. In Japan, approximately 70% of all domestically-focused equity funds are passively managed which may indicate that the U.S. can tolerate even more more indexing before market efficiency suffers.

Together, BlackRock and Vanguard hold over 5% of over 4400 stocks worldwide. This raises the question of whether ownership concentration has an impact on how willing companies are to compete for increased attention and more productive results. In other examples, increased percentages of shared holdings has diminished the pressure for competition across airlines. BlackRock and Vanguard are poised to grow, while money increasingly flows towards large passive investors. This enables their percentage shares to increase. But should this percentage exceed 10%, many industries may have cause to worry.