Mathmatically the Indexes are now harder to beat also. More...

Mathmatically the Indexes are now harder to beat also. More money follows the Indices, which lowers the debt and equity funding costs for those companies that are big weights in the Index. It's been a subtle change over many years, but it does matter.

Take CBA, biggest stock in the Aussie Index, they could raise $5bn equity tomorrow at very low cost just because all the Index tracking funds would need to participate and would take almost any discount. A non-Index stock trying to raise a similar amount relative to mkt cap would pay a penalty for that, and the Fund Managers would be the benficiary of that discount by underwriting the deal. That Index weight advantage wasn't so profound 20 years ago.