Indices · Index specialist topics · lesson 3 of 9 · 8 min read · David Alexander
The index effect, and what the evidence says
index effect
The price impact on a share of joining or leaving an index. The mechanism is real - inclusion creates buyers who are required to buy - but the size of the effect has changed substantially over time, and treating decades-old findings as current is the usual error.
This lesson is part of the advanced modules.
Modules 6 to 8 are included with a paid account. The definitional summary above is the whole of this page until then.