The growth of index investing can reduce the strength of corporate oversight and lead to less competition Copy

This argument is not persuasive. The proposition is that if asset managers own all the companies in an industry, they would want them all to do equally well and will therefore not promote aggressive competition.  

However, every company will still seek to outperform its competitors.  Secondly, all asset managers universally tend to focus on corporate governance, risk management and other green and ESG (environmental, social and governance) principles which are usually obligations/ commitments also set out in the investment terms, mandates or fund prospectuses.