It can be true, but my point is that it probably isn't true. And I've explained why I think this. You can look at passive investing as defecting in a large game of prisoner's dilemma (tragedy of the commons). With passive investing you enjoy the benefits of an efficient market without doing any analysis yourself (or paying for somebody else to do it on your behalf). So you can advise every individual to defect (because it's in their best interest) but if too many people defect the system breaks down.

So when you say "It can be true that [...] retail and institutional investors shouldn't invest in actively-managed funds", that can mean two totally opposite things, as hopefully you can now see. That's why we talk past each other. I also suspect there is a real disagreement about what the impact of index funds will be in the long term.