The Spotlight Turns on Index Providers (Part 1)

They have quietly acquired huge powers--and responsibilities.

John Rekenthaler 24 February, 2020 | 12:15
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Into the Glare

Index funds have been heavily criticized. Index funds warp equity prices by rewarding securities that are held by the major indexes and penalizing those that are not. They have inflated a stock market bubble. They are slothful (or even damaging) corporate stewards.

In contrast, companies that create and provide indexes have operated largely in the shadows. Their products appear in nightly summaries of stock market performances, as well as in the names of many funds, but the firms themselves haven’t appeared in many negative headlines. Vanguard takes the heat, not MSCI.

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About Author

John Rekenthaler  is vice president of research for Morningstar.

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