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The Spotlight Turns on Index Providers (Part 1)

They have quietly acquired huge powers--and responsibilities.

John Rekenthaler, CFA 20 February, 2020 | 0:14
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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, CFA  John Rekenthaler has been researching the fund industry since 1988. He is now a columnist for Morningstar.com and a member of Morningstar's investment research department. John is quick to point out that while Morningstar typically agrees with the views of the Rekenthaler Report, his views are his own.

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