FYI: Index providers take different approaches to partitioning the U.S. equity market by size. S&P Dow Jones Indices divvies up market size segments by rank, ordering stocks by their market capitalization and assigning a fixed number of stocks to its large- (S&P 500), mid- (S&P MidCap 400), and small-cap (S&P SmallCap 600) size segments. The Center for Research in Security Prices, or CRSP, carves up the market using market-cap breakpoints. For example, stocks representing the top 85% of its universe of U.S. stocks make up its large-cap index. These methodological differences seem small, but they lead to the risk that investors may unknowingly create overlapping size-segment exposures--even if they own funds tracking indexes from the same index family. This is because these index families' market-cap segments are not always mutually exclusive. Here, I'll explore this risk and its implications for portfolio construction.
Regards,
Ted
https://www.morningstar.com/articles/926022/untangling-how-index-providers-break-down-the-mark.html
