In a world where people buy funds that are tied to indexes, the people who determine what go into those indexes have become very powerful indeed.
The index gurus are at it again. Some of the best-known stocks are getting reclassified on Friday, and that means a lot of money is going to move around.
Today, there is $6 trillion directly indexed to just the S&P 500, the largest of all the indexes in the amount of money tied to it. There is trillions more that is indirectly indexed. That is, many funds use the S&P as a bogey and try to match their returns without paying a licensing fee to Standard & Poor's.
And that's just the S&P 500. There are thousands of indexes that slice and dice the stock and bond market in endless ways. The people who issue those ETFs , for the most part, do not own the indexes that are behind the ETFs. They license those indexes from index providers. The largest are Standard & Poor's, MSCI, and FTSE Russell .
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