Urbandreamer wrote:My issue is that the names of my Aviva investments, I.E UK equity index tracker have not changed, but what they track HAS. They are now excluding things that they previously did not. I'm also less than happy with their exclusion choices.
In my opinion the best way to think about an index is that it is a set of rules. The constituents and weights within that index will change all the time, for a variety of reasons. But the rules should stay the same so that as long as you like the rules, then you should be happy.
From time to time a fund manager will change the index they follow. But they have to notify fundholders who may then choose to switch.
Or more rarely an index provider will change the rules for their index. An example might be a country moving from "emerging" status to "developed" status.
In general the broader an index, the less likely that changes are and so the lower the turnover with resultant costs. A fund following an all-share index in theory would never have to re-weight. There would be no promotions or relegations. In ETF form there would be no buying or selling due to cashflows in and out of the fund. And only corporate actions would trigger a rebalancing.
Conversely the narrower and more customised an index is, the more you are exposed to the whims of that fund and its manager.