Stock Indexes Are Changing. Is Your Portfolio Prepared?

We're teaching my son how to play cards, okay? So basic games. He's five years old, so we teach him how to play. Teach him how to gamble early. Exactly, you know us. That's right. So we teach him how to play crazy eights, right? And the beginning of the game, the hand is pretty tight. And then, as the game progresses, the hand starts to open up, and up, and up, and up. And then, all of a sudden the cards are on the table by like the third deal, right? And you're like, "Dude, pick it up. Like we can see your hand, and we're all gonna play off of that." We try to ignore it, but you know, it's hard. So you have to teach people, you keep your cards close to your chest. That's literally an expression. That's exactly the opposite of the way it works with indexing. Indexing just splays their cards out. "Here's what I'm doing. Does anyone want to take advantage of this?" Welcome to "The Informed Investor," where we break down the latest financial headlines, bringing in research and insights to help you separate the news from the noise. Stock prices change every day. So how often does your index fund change its holdings? That's the topic of the day here on "The Informed Investor." Thank you for joining. The show is brought to you by Dimensional Fund Advisors who is bringing financial science to investing. I'm Mark Gochnour joined by the always entertaining Jake DeKinder. And joined by Rob Harvey, a repeat guest here on the show. Yeah. Rob, you are co-head of Product Specialist. That's right. Thanks for having me back on the pod. It's great to have you back. You're always entertaining as well. Thank you, I appreciate it. What's the frequency, and how do index funds change their holdings? We refer to that in the industry as reconstitution. That's right. A lot of times you call it rebalancing or just literally changing the holdings, but we're gonna refer to it as a reconstitution here today. So Jake, I'll go to you. And let's give a little history lesson here on kind of how index funds came about back in the day. Yeah, it's interesting. You know, you go back to the early '60s, and this is fascinating. Like we really didn't even have any data on manager performance. And then, you get computers that come on the scene. Databases start to be created. You get something that's created at University of Chicago, the CRSP Database, Center for Research and Security Prices. And basically what you've got now is you've got data to say, "Hey, these stock picking managers, how are they doing?" And the first studies that we started to run on this, it was like, "Man, that manager performance is not that great." And so now you get this conversation that comes about in the '70s. It's like, well "Hey, could we just kind of design some type of benchmark or investment that sort of was the average roughly of what you should get for operating in that part of the market?" And that's kind of the birth of index, you know, and how this started. The problem is that indexing really kind of from the beginning was designed a little bit more as a benchmark than an investment approach. There wasn't a lot of thought put into, to your point, how often do you update prices? How's trading gonna work? How do you incorporate new research? So it was good at one point, but we are many, many decades past when it was maybe some form of an evolution in the industry. It was designed to assess managers. Exactly. Not necessarily be a real investment day-to-day type of solution. But it did become very popular because it was very low cost, and it was pretty transparent. I think people kinda lumped onto that when you talk about the performance. Usually, they were underperforming the index. So that's kind of how it got so popular. Well, that really is the original draw, right? Which is if you're with your active manager, and you're underperforming the benchmark by 6%, or you could go with an index fund and you underperformed by six to 10 basis points maybe. And it was more than that back then, obviously, because the fees were higher, but you're like, "Okay, well, I guess I'll underperform by a little bit forever as opposed to take these massive years and see this huge underperformance." Because even today we see that active managers do a terrible job of outperforming the benchmark. So the allure of indexing is very explainable because really active managers drove people towards indexing. But one of the challenges of that is it can be very costly to reconstitute the index or rebalance the index because, Jake, I think you mentioned this, everybody's doing it at the exact same time, and there's a cost to doing that. And so Rob, a lot of that's coming up this summer. Right. In June where several of these indexes, globally, are going to rebalance or reconstitute. That's right. And that's why we're doing the show today. Yep, that's right. So we're kind of gonna do a little bit of a sneak preview beforehand 'cause we have a good idea about what some of these indices are gonna do. And then, we're gonna do a little bit of a retrospective, right? What happens after the index actually changes some of these names? What's changing? What are some of the costs, right, that are associated with that? And, again, you know, indices don't do this very often. So most commercial indices do a rebalance once, twice, maybe four times a year. So these events are extremely impactful. If you're looking at taking, let's say for like the Russell 2000, for example, annual turnover of maybe between 10 and 15% all in one or two days, that's a lot of trading you have to do in small caps, which is generally considered to be a less liquid area of the market. Can be costly. So let's talk about Russell and then, we'll get into some of the other index as well. But it's a very well known, very prominent index that's been around for a number of years, decades. Let's talk about the Russell. Let's start with the Russell 2000 and talk about that reconstitution that's coming up here. Usually, the third Friday of June, right? Right, so on the third Friday of June is when the actions actually occur, the changes actually occur. But what's interesting about the Russell is that you know way in advance of the third Friday in June what those changes are gonna be. So they have an April, late April, what they call their rank day. And essentially that's when they go through the securities that are in their different indices and the market overall and decide what stays in small cap and what stays in large cap. And by and large, those decisions don't really change over the next two months. And we can talk a little bit about why that's the case 'cause it's actually, they're doing that on purpose. But using some of that stale data, which, you know, as I'm talking about. is two months before the changes actually happen, and only making those changes historically once a year, now, they're doing twice a year, can lead to a lot of style drift. And also, there are trading issues. There are trading costs that are associated with that. And they're doing it on purpose because there's so much money now tracking these index funds like the index managers that are following what the index providers tell them to do. They need time to prepare and get ready for it. I guess that that's the real reason then, right? Why you have that two month lag. I just wanna come back to a point you made there, which was the index versus the index fund manager. And I think that point alone surprises a lot of people. You know, we put on these conferences all the time, and I'll ask a room of financial professionals. I'm like, "So who designs the index? The index manager?" And it's like blank stares. But really think about that. You've got a third party who's setting these rules and designing it, and then, you've got a manager's job whose is to track it. And quite frankly the two of them probably have different motivations. I mean, what would you say the main motivation of an index provider is? Yeah, well let's go through that ecosystem 'cause I think what you're setting up is really important. And my dad worked in banking all of his life, and he is always said, "Follow the money, right? Like, who's getting paid, and what are their incentives?" So let's follow the money through this transaction. Okay, so you're an index fund for example. What is the key metric that we use as an industry to determine whether or not your index fund is doing a good job? One metric. Tracking error. Tracking error, right? So you wanna match the index as closely as you possibly can. The index, how do they make their money? They make their money off of index funds that track it. So the more money that follows the index fund that's following your index, the more money you make. So you want to provide your customer, which is the index fund, with a good experience. How do you make sure that they keep their tracking error very low? Number one, you don't touch your holdings very often. And number two, when you do touch your holdings, you give them lots of heads up so they can mark their calendars and say, "Okay, we need to trade these names on these days to reduce our tracking error as much as possible. Right? You'll notice that the piece that I didn't talk about in there is what is the investors' incentives? What do they want to get outta this, right? Because if you ask an end client or an advisor, "Hey what are sort of the goals of the portfolio?" It's growth of wealth, right? It's outperforming to the extent that you can within a certain risk budget. It's not tying the benchmark. In fact, you probably wanna do better than the benchmark. That's not a factor that's being considered by the index fund, right? They just care about tracking error. So we'll come back to the cost, then, of this. I'll call it the cost of tracking here. We talked a little bit about Russell, and it's all the Russell indices, not just the Russell 2000, but Russell 1000 Value, 1000 Growth. They all will do it, reconstitute the third Friday of June based on April rank dates. Yep. Right? Tell us a little bit about some of the other major indexes out there, and when they reconstitute, and how often they do that. Yeah, so for example, like S&P does a quarterly rebalance. And S&P works very different from Russell in the sense that Russell operates off of a rule book. So you can read the rule book, and it's pretty long and pretty dense, but you can get through it and understand what the Russell's gonna do. The S&P doesn't work that way. It has a methodology guideline set where you have to meet minimum criteria to be included in an index. And then, if you meet that, there's actually a separate special index committee that decides what's going into the index and when, and what's interesting about the S&P's index committee is we have no idea who they are, and nobody knows. So it's a secret. So we know that they work at the S&P, but that's about all that we know about it. And those people are the ones who decide, you know, once you've met this minimum criteria, are you gonna make it in and when? And they don't publish their meeting notes. There's no transparency in any of that. There used to be more, but now there's a lot less in terms of them explaining the decisions that they're making even after the fact. So you're kind of unclear about how much of a heads up are you gonna get, and what securities are coming in, and why. It seems like a pretty typical active manager. Yeah, I would argue the S&P is the largest active manager in the world because they are making a lot of decisions. And you've seen that historically in some of what they've done. And they used to explain a lot more about what they did and why. And it sounded very active to me then, and it still does today. I like that. I mean you give great presentations at a lot of our conferences, and that's really kind of the theme of one of 'em is your sort of passive index may be more active than you think, and it's for all of these reasons, which, again, maybe there's some form of logic on why you might do it. There's the incentives, there's all of these things, but it gets back to, is it the best way to ultimately capture market returns or above market rates of return in an efficient manner and not give away what indexes give away? And that's another thing too. You know, we're talking about you've got the index manager, and then, you've got the index provider, right? And the problem is all the inefficiencies that you have in the index and how it's constructed, because the manager's trying to minimize tracking error, zero tracking error, you almost don't know the underperformance relative to what you could be achieving. Right, and we see this a lot, and you were bringing this up earlier, where people will talk about trading costs and style drift, and they'll be like, "I don't see it. Where do I see it?" Yeah. 'Cause the index fund is on top of the index. It's doing what it's supposed to be doing. It's like, yeah, but if the index does something stupid, and then, the index fund does something stupid at the same time, how do you know how much money you left one table. If your friend jumped off a bridge, would you jump off a bridge? Right, so like, but then if you step back, and you're like, "Wow, those two kids are jumping off a bridge, that was dumb," that's when you can see it. But when you're both doing it together, right, it's like it's you in your shadow. Exactly. It's not a good benchmark. So an investor might say, "Hey, I got 9%. That's exactly what the index did because I'm in an index fund." Right Right? But it could have been something higher. Yes. And they just don't know... Right. What that could have been. Because that's not how we're benchmarking. Yeah. We're saying, "How did you do against yourself essentially?" 'Cause they're doing the same thing at the same time. Alright, so we talked about Russell. We talked about S&P, Standard and Poor's indices Another one we're asked about, Jake, a lot is CRSP or Center for Research and Security Pricing indices. Yep. What's their frequency of rebalancing? Very similar to what you... Well, they kind of take a blend of a couple different approaches. So they rebalance more frequently than a Russell. So they're four times a year, but they have more of a... They have sort of a staggered reconstitution. So for Russell, it'll occur like on a day where you have it or now two days where you have all the trading really happen. And CRSP will take those periods of time, and say, "Okay, well, our next reconstitution event, we're gonna tranche it out over five days." So the reconstitution event, all the changes, that will happen in this quarter, will occur over the course of basically like a little bit shorter than a week. And the idea is there that "Hey, you can absorb better liquidity in the market. Right? You don't have to demand 15% in a day. You're demanding 5% over three days or whatever it ends up being." And that's great. But the downside with that is, still, there's a huge amount of costs associated with indexing, which is you allow everybody else in the market to see exactly what you're doing. And that part doesn't go away with a CRSP index, right? That's still very much a factor. But yes, from a liquidity perspective, it's a little bit better. Although, why wouldn't you use all the trading days in the year? I mean, I was just gonna say that. You got 250 trading days, so I don't care whether you trade on two days during the year, or 10 days during the year, or 15 days during the year. But you had the option of trading on 250. So you almost have two things that are going on, which is if I had to move this many securities during the course of a year, do I wanna do it on a really small number of days or do I want to do it on every available day? Right. And then, there's the other part which he's bringing up, which is would I want people to know what I'm trading as well? Yes. So you're kind of getting hit twice. Yes, yes. Well, okay, so two things. First of all, use your toothbrush analogy. Yeah, yeah, so- On the trading day act. Because, you know, when Jake's saying like, "Well, we got 250 trading days in a year." And people, when we tell them that, they're like, "That's a lot of trading that you're doing." Right? But actually what you're doing is you're taking the same amount. You could take the same amount of trading, let's say 15% a year in a small cap portfolio, and you could jam it all on the third Friday in June. That's one option. Or the other option is you just bring a couple of basis points to market every single day, right? And then, you utilize all the minutes in all of those days to have sort of even more liquidity that's available to you as opposed to just trading at the close. And, you know, we like to say it's kind of like brushing your teeth or taking care of your teeth. You got two options on how you wanna do it. One is you brush your teeth for two minutes, twice a day, every day of the year. It's how most of us do it, right? I can tell by your smiles. My dad was an orthodontist too. There you go. He would recommend that. And flossing, and flossing. I told you that, I actually told you that. Or you could take the indexing approach, which is just brush your teeth for seven hours straight right before you go see your dentist. It's the same amount of toothbrushing that you have in the year. Same amount of toothbrushing that you have in a year. But one of them is a much better way to take care of your health. And the other one is just kind of like procrastinating until you have to jam it all. It's like the same thing as like studying for finals the night before. You're not gonna learn anything. It not the best. It's not the best, right? So we all know like you have to commit a little bit every day to taking care of your health, taking care of, you know, if you're in school, your education. But then also same thing with your portfolio. Why wouldn't you? Alright, let's talk cost, then, of jamming all of that reconstitution or rebalancing into one or a couple days and the impact that has on what you're buying or selling at the index level, Right. First and foremost, reconstitution, it's the most basic fundamental principle in all of finance, which is if you tell someone what you're gonna do before you do it, they're gonna take advantage of that information, right? So if you say, "Hey, two weeks from now, I'm gonna be buying these stocks, and I'm massive because index funds are massive," there's a lot of other players in the market who say, "Oh, that's interesting. So you're telling me that you're gonna come back in two weeks and buy this stock no matter what at any price because the index is adding it? I might wanna do something about that." Right? So like I think about this a lot. We're teaching my son how to play cards, okay? So basic games. He's five years old, so we teach him how to play. Teach him how to gamble early. Exactly, you know us. That's right. So we teach him how to play crazy eights, right? And the beginning of the game, the hand is pretty tight. And then, as the game progresses, the hand starts to open up, and up, and up, and up. And then, all of a sudden the cards are on the table by like the third deal, right? And you're like, "Dude, pick it up. Like we can see your hand, and we're all gonna play off of that." We try to ignore it, but you know, it's hard. So you have to teach people, you keep your cards close to your chest. That's literally an expression. That's exactly the opposite of the way it works with indexing. Indexing just splays their cards out. "Here's what I'm doing. Does anyone want to take advantage of this?" And there's actually a big part of our industry that is committed to trading before they trade because you know what they're gonna do and when they're gonna do it. And you also know who they are. So that that is a real cost that, you know, some academics have estimated to be, you know, depending on the index, 20 basis points a year, 40 basis points a year. Oftentimes much larger than what the expense ratio is of that fund. So you think, :Oh I'm only paying nine basis points for my fund. Well, if you gave up 20 in reconstitution, you gotta add those together, right? That's important. But I also wanted to talk about the fact that with reconstitution, the way that we traditionally measure the reconstitution effect is say, "Okay, at the point in time where the index announces I'm gonna make these changes, that's your start date. And then, when they actually make the changes, that's your end. And then, you measure how much securities change in between those dates." And they change. But that kind of leaves out a whole bunch of important information that happens before that event, before the actual announcement. So let's talk for a second about like the NBA playoffs for example, okay? OKC, phenomenal team this year, right? So if I came to you, Jake, and I said, "Hey, what do you think the odds are? I'll make you a bet. I'll make you a bet that OKC is gonna be in the 2026 playoffs right now. $20 for me, if they're in. $20 for you, if they're out." They're already in. It's too late. Okay, so let's go back in time a little bit. Let's say mid-March, they haven't clinched yet. They're one game away from clinching a playoff birth. Let's look at the facts. Okay? The facts are they have the best record in the west, they have the best record in the league overall, they're a phenomenal team, and they won the championship last year. All they have to do is beat the Magic, and they're in. And I come to you with that same bet. And I say, "Jake, what do you think? $20 for me, if they're in. $20 for you, if they don't make it." Nope. Nope, not interested. He's not waiting for the announcement to say, "OKC's in the playoffs," 'cause it's too late. There's no money in that bet. And the three of us were actually in OKC last year. That's right. During the parade. Yeah. People were already talking about what next year, what this year, would look like. So you don't wait for reconstitution anymore 'cause it's too late. You start thinking about beforehand that probability weighted outcome of is it likely that it's gonna be added? Because ,again, if you wait for that announcement, everybody knows. So they take advantage of it, these people out there. Yeah. They'll say, "Okay, I know in..." I'll just make up the number. "In six weeks, stock XYZ is gonna be added to the index. So I buy it today, and then, if Jake's an index manager, he has to buy it for me in six weeks, and the price just gets inched up, inched up." Often time it does. And so I can sell at a much higher price. Yes. And then you often see after that day of reconstitution, the price kind of goes back down. Right. Same thing on the sell side. If I know the index is gonna sell something in six weeks- Sell it now I sell it now. Yeah. Right? And that the manager's doing that, and that price gets bid down, bid down. And so then Jake's gonna get less as index manager when they sell it. That essentially the- That's the trend. Nature of that front. That's what you tend to see, yeah. Okay, so that's one cost of it there. And you mentioned the several academic papers around that. Yeah. And it varies depending on the index. You know. It does, and actually there are index providers who have come out with papers and said, "No, no, no, here's what the indexing effect actually is." And they kind of calculate a different way. I have never seen a paper that said that the reconstitution effect is positive. So they could kind of, you know, sort of argue about how big the impact is. It's negative no matter how you measure it. There is fortuary cost. Yeah, there is a cost. All right, so that's one cost. The other one we talked a lot about is style drift. The fact that if you have a targeted asset class, you may not necessarily always have full exposure to that. And there's a cost that comes with that too, Right. Well, go back to, I mean keep it simple, right? You can trade 250 days during the year. You can trade a couple days during the year, right? If you don't trade every single day, you don't look at market prices or at least you may not trade to make sure you get stuff into your portfolio or outta your portfolio, which means by definition your portfolio is gonna drift away from what you may want to own. And if you look at something like the Russell 2, what we see is you see considerable style drift over the course of the year. Now, why does that matter? Okay, 100 years of research that says small should do better than large. Here's the problem. You don't have a clue when small is gonna do better than large, right? And so if you drift away a little bit, and you don't own all the small stocks that you would want to, and they pop, you're gonna leave returns on the table. And we, you know, we've seen it at so many different points in time that you get these sort of huge pops in small, or big pops in value, or whatever it may be. And if you don't have all the stuff that you want in your portfolio, you basically aren't gonna capture all the returns that you should. So if you weren't positioned to capture small value, you might leave some returns on the table. Yeah, yep, and to your point, we see this time and time again with style indices or component indices like the Russell 2. Russell 2's weighted average market cap right now is about $5 billion. It's a small cap index. You've got an $80 billion company in the Russell 2 today. So, and that is by nature of the fact that it is a massive company, is also a massive part of the Russell 2000. So in those events where small caps do really well, do you pay more in an expense ratio, if you're in the Russell 2? No. Do you fully participate in the small cap rally? Also, no, right? Because you've got some mid caps in there. You've got some large caps in there, maybe. So, and that happens pretty regularly. Alright, so this is year to date returns through April of 2026. S&P 500 is up 5.7%. Russell 2000 value, 15.1. I mean that's that 10% differential you're talking about, which is massive. If you're not properly weighted in the Russell 2000 value, you're missing out on exposure to those. You only get performing stocks. So I go back to that example you just said. Like you're telling me there's an $80 billion market cap company that's in the Russell 2000. Yep. A traditional small cap index? Yep. How does that happen? Well here's a few reasons that it can happen. One of the reasons is, remember, that you're operating off of pretty stale data, right? So if you're only reconstituting once a year, which is what the Russell did, the last time you had a change in your portfolio was June. A lot could happen between, and a lot did happen. Think about what happened over the last nine months, right? So there's a lot that changes there. But then also remember you gotta add two months on top of that because there's the June reconstitution, but rank day happens in April, okay? So already you're like, "Okay, that was over a year ago now that what we're talking about for this name being decided to be in the small cap." But then, you actually have to add on even more to that. And the reason is because a lot of indices, including the Russell, kind of create like a buffer zone for what moves 'cause they wanna mitigate some of the turnover in their indices, which in theory is good, right? We always talk about trading costs, and, you know, so you want to kind of keep trading costs low. And the way that they do that is they say, "If you're close enough to a small cap index, but now you're, you know, large cap for example, we'll keep you where you are. Just be close enough." So stale data off of stale data off of a buffer. And that's how you wind up with these $80 billion companies in the Russell 2. And by the way, you know, we talked about a couple different indices here too. People think, "Well, my S&P 500 is my large cap. Maybe my Russell 2 is my small cap. And then, I don't have any overlap." And actually this year, like many years, you do have overlap between those because they're not reconstituting at the same time. They think about the universe differently, right? And then, you could double up on some companies, and that may not be what you think you're getting. I think most investors would be very surprised- Very. That they have the same stocks in both the S&P and Russell 2000. Yes. And you talked a little bit about style drift, Jake, this year in terms of year to date returns. But you go back in time, there's a great example you often give about 2016. Yeah, I think I stole that one from you just to be clear. But that's all right. We steal stuff from each other all the time. No, but it's an interesting stat. You go back to, I think it was the eight days following that 2016 election. You saw about an 8% pop in small caps. I mean small versus large. Now, historically, over the last 100 years, you know, the small cap premium, the difference between small and large is, I'm gonna call it two, two and a half, you know, depending on how you calculate. You got 8% in eight days. Again, imagine your portfolio had drifted away from what you wanted it to own, and small caps pop 8% in eight days, and that's November, and we just said that we were dealing with figure it out in April, and then, actually make a change in June. That's a lot of time between June and November. Hey wait, I got a quick question for you. And I was thinking about this before we came on. So something leaves Russell 2. Yeah. There's a probability it's gonna end up in Russell 1. Yeah. Right? And so if I had a Russell 2 index fund, and I had a Russell 1 index fund, and that's how I was building my asset allocation, do I almost get hurt twice by what we're talking about? Yeah, and this is interesting too 'cause it also depends on what is the size or how much money is following the next index. So like Russell 2000 indices for the part of the market that are operating in tend to be more popular than Russell 1000 indices are 'cause a lot of people in large cap will use like an S&P 500 for example. Yep. So that's part of the consideration you have to make as well. But what you're saying is you're selling it out of a fund, and then you kind of get hurt on the way out, and then you're buying it into a fund. You might get hurt on the way into that too. Or maybe it sits in no man's land, right? If you don't have a Russell product on the other side, you're using an S&P and a Russell. So then, it gets completely dropped from your holdings, and then, maybe you pick it up later, right? Like so it's not this sort of pure lack of overlap and just this transparent like let the stock move and without having to go through a broker and pay an exchange and pay a custodian. Actually, there's a lot of that that has to happen on both ends on the way out, and then, on the way back in. And that's kinda interesting too, then, if you think about a complete equity allocation, and you take a complete index approach. Yeah. For sort of, for all of your pieces, whether that's US, non-US, all of these things, all of these concepts we're talking about, in some form hold, correct? Yes, yes. Yeah. And this is why we talk about the power of core strategies, right? Of market wide strategies, which is if you do that, you can have some of those moves inside of there and have that be mitigated. So market wide tends to reduce some of what Jake is talking about in component indices, which, by the way, most advisors tend to use something like a component index, but- And in component index you're talking asset class like small value. Small value or rich value or, you know, profitability, or whatever it is. But even within a market wide index, you still have to think about what about those names that are too small to be in today, but will be in tomorrow? So we've talked a lot about US-based indexes here. What do you tend to find outside the US in terms of reconstitution, their frequency of it, et cetera? Yeah, so reconstitution outside the US, very common if you're looking at like an MSCI or FSTE product. They'll do something like a quarterly rebalance, right? It's usually a bigger rebalance twice a year. And then, but they will touch up the portfolio quarterly. From a reconstitution effect, securities outside the US tend to be less liquid, tend to have wider spreads, lower liquidity, right? So that's gonna be more costly to add some of those to the index fund. And really just to summarize the whole conversation, indexing was started really to assess managers. Somehow it became then a real investment for people just because it was so low cost and very transparent. But the problem with that, then, if you are doing very infrequent rebalancing, is you can get very expensive both from a cost standpoint as well as from the style you talked about there, Jake. So what's your alternatives? Find a manager who's looking at prices, not only every day, but all throughout the day and manages a portfolio every day. To me it's incentive. I like how you keep coming back to incentives, right? Like what's the incentive of an index provider? We talked about that. Licensing, get dollars to follow it, right? What's the incentive of an index manager? Look as close to that index as I possibly can. US, maybe I get zero tracking error. Maybe I'm a little off in international. But my objectives still look the same. And then, I think as an investor, ask yourself like what's your incentive? And I think for a lot of people it's capture market rates of return in an incredibly efficient manner and do it in a way where maybe I don't leave money on the table because I've completely outsourced that investment decision to some third party that has different incentives. As an investor, I'd wanna know that everyone along the line of investing, meaning my advisor and my asset manager, we're all on the same team. Yep. I want us all to be on the same team. And with indexing, to your point, you have to ask yourself the question, are we, right? What are we looking to achieve? Alright guys, that was a fun conversation. A lot of good stuff there. I appreciate all your insights. Good having you back on the show. Yeah, good to be here. Rob as well. And thanks to all of you for joining "The Informed Investor" here today. Keep in mind this was part one of the rebalancing/reconstitution discussion. We're gonna come back after June and talk about what we saw with all this money getting reconstituted in the month of June. So stay tuned for part two. To know when that is gonna be released, be sure to subscribe to "The Informed Investor." And also check out the show notes. Check out David Booth, our chairman of Dimensional. He has a newsletter called "Stay Calm Investing." It's a great source of information, so be sure to check that out as well. Thanks, everybody, and have a great day.