Asset bubbles continue to threaten economic stability despite financial markets becoming more efficient. The persistence of bubbles is due to the short-term nature of the relationship between asset owners and managers, leading to herding behavior. This behavior is driven by the business risk of asset managers and the momentum bias in financial benchmarks. As institutional assets under management grow, procyclicality could intensify. To address this issue, policies should focus on the root cause of the problem, including reforms in contract design and financial benchmarks.