NOT all funds that track the same index are created equal. For some, inequality is part of the design. Take the S&P 500 and the S&P 500 SPDR ETF.
Apple is the S&P 500's largest constituent, 4.7 per cent in early January. News Corp, the smallest member, accounted for less than 0.01 per cent of the index.
That's because the S&P 500, like many other major indexes, are "capitalisation weighted", meaning that each company's value, or market capitalisation, determines how much weight it has in the index. The idea is to get a faithful representation of the stock market by giving each individual stock its appropriate relative value.
But that's not the only way to build an index.
One alternative is to maintain...
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