History of Financial Index Exclusions

Comparing historical precedents where MSCI and other providers removed companies from indices due to business model or ownership structure changes.

The top 3

  1. The SPAC Exclusion Wave: Index providers previously tightened rules to exclude SPACs (Special Purpose Acquisition Companies) before they demonstrated viable long-term operating revenue.
  2. Real Estate Investment Trust (REIT) Caps: Indices often cap or exclude entities that shift from being operating companies to purely passive holding vehicles to maintain sector integrity.
  3. Market Capitalization Free-Float Adjustments: MSCI's most common exclusion remains the 'low free-float' rule, which prevents illiquid stocks from dominating indices regardless of their treasury size.

Sources

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