Most market indices try to be as neutral as possible and follow strict rules wherever they can. But for every rule you define there are sometimes grey areas where one can interpret things one way or another or where two or more companies seem similarly suitable for index inclusion. That is why many indices have a discretionary component, i.e. a group of people that decides which companies will enter an index and which ones will drop out. Probably the most widely used market index with such a discretionary element is the S&P 500.
So interesting, however those that they keep in I wonder how many of those are just "value companies". Would need to look at the study to understand the data treatment but interesting stuff.
Would be interesting to read about the discretionary component of other indices,e.g: MSCI. And also: are there any ETFs in the market following purely "rule based indices" without this discretionary component? Any info on that?
So interesting, however those that they keep in I wonder how many of those are just "value companies". Would need to look at the study to understand the data treatment but interesting stuff.
Would be interesting to read about the discretionary component of other indices,e.g: MSCI. And also: are there any ETFs in the market following purely "rule based indices" without this discretionary component? Any info on that?