Owen Lund
key takeaways
- Index investing is more dynamic than many investors realise
While investors may hold an index fund for years, a capitalisation-weighted index is continually updated to reflect changes in the global market.
- Investors don't need to predict future market leaders
New companies can enter the index as they become eligible, while successful businesses naturally increase their representation over time through a transparent, rules-based process.
- Global indices evolve as markets evolve
From high-profile IPOs to the inclusion of new investable markets, such as China A-shares, cap-weighted indices are designed to reflect changes across the global investment landscape.
The world doesn't stand still and markets don’t wait for investors to catch up. Companies rise and fall. New businesses list their shares. Industries evolve and geographies around the world become more accessible. Keeping a global portfolio in step with all that change is no small task. But an index can do something a custom portfolio may struggle to do; it can evolve systematically as the market itself changes.
That advantage is easy to overlook when thinking about passive, index-based investing. While an investor may buy an index fund or ETF and hold it for years, the index underneath that investment is anything but static. Every year, companies enter and leave the index as businesses list, grow or fail. Taking the FTSE All-World as an example, the chart below shows just how many companies can be added or removed beneath the surface of what might otherwise look like a static set of stocks.
You don’t have to know tomorrow’s household names
A feature of broad, global, index-based investing is that investors do not need to keep pace to actively understand and invest in the latest companies moving in the market. As the investable market opportunity set changes, the FTSE All-World index changes with it.
When Uber listed its shares on the New York Stock Exchange in 2019, it qualified for fast entry into the FTSE All-World just a week after its initial public offering (IPO). Saudi Aramco followed later that year after what was then the world's largest IPO. SpaceX, which set a new record for the size of an IPO in June 2026, provides another example.
Semi-annual additions and deletions for FTSE All-World index
A world that keeps moving
Some periods naturally generate more additions and deletions than others. One of the clearest examples came in 2019, when FTSE Russell began the phased inclusion of eligible China A-shares into its global equity benchmarks. As mainland China’s domestic market became more accessible to international investors, around 700 additional Chinese companies entered the investable universe represented by the FTSE All-World.
The change is a reminder that the index is designed to evolve with the opportunity set itself - capturing not just companies that grow within established markets, but also new markets as they become accessible to global investors.
The larger message is a simple one: The global equity market never stands still.
The FTSE All-World Index is designed to evolve alongside that changing opportunity set through a transparent, rules-based methodology. For investors using a fund or ETF that tracks the index, much of that evolution happens in the background.
Rather than having to decide continually which individual companies should be added or sold simply to maintain broad global equity exposure, investors can retain that broad exposure while the market underneath it changes.
Disclaimer
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