Benjamin Felix

On the idea of changing index methodologies, that's a huge one.

S&P in 2004, they announced that in 2005, I believe that they would start free floating.

Prior to that, they were not using free float weights.

I found an article about this from 2004.

It's all focused on

The sense of most index users is that float adjustment reduces the costs of running index funds and ETFs because stocks with less float and therefore less liquidity have lower weights in the index.

Index users also feel that basing the index on available shares instead of total shares means that the index is a better reflection of the market and through the market of the economy.

It's actually super interesting.

I wish I'd looked at this earlier.

In an October 2003 concept paper prior to announcing the decision to move to float adjustment, S&P highlighted reasons against the switch.

We looked at the academic and theoretical basis for indexing, but found no arguments for or against float adjustment, said Blitzer.

Side note, David Blitzer was an early guest on this podcast.

when he was still with S&P before he retired.

It's an episode worth checking out if you want to hear more about some of the inside baseball of how indexes are created and managed.

This is more quote from David Blitzer, increased interest in investing outside the US seems to have raised the awareness of float issues in foreign markets where cross holdings and strategic holdings by governments or founding families are more common than the US.

That's also interesting.

on the topic of indexes make changes to reflect changes in the market.

And I think as this article also points out, changes in how indexes are being used by investors.

I think we heard about that when I was in New York and talked to Jim Rowley and Tim Edwards.

They talked a little bit about this, just about how index providers and index fund providers work together to figure out what the index should look like.