fund cash levels have been pretty low for years as the managers dont want to be left behind relative to their peers. yes the programs do make up a huge chunk of the daily volume and i dont see that changing anytime soon so its the game we must play as the peons.
Twice a month, 10's of millions of corporate workers around the country plunk a percentage of their salary into mutual funds/index funds. In most cases this money will be put to work buying stock.
This will only grow as employers close pension plans to new employees and choose to offer 401Ks.