While every permutation of fund you can think of probably exists, you are confusing two issues.
An MSCI small cap fund will be a tracker fund. A bunch of money goes in and the fund manager's only goal is to try and maintain shareholdings in line with the index at as lower cost as possible. They want to hold the correct amount of every stock in the MSCI index they track (in this case small caps). Doing this at the lowest cost possible will maximise their profits relative to the set percentage fees they receive for doing this job.
A different category of funds is actively managed funds. They may use benchmarks like MSCI as a guide to stock weightings but will then take bets and have some sectors and stocks over-weight and others under-weight, possibly down to zero weighting where they are not held. A short fund is a more extreme version of active funds where they will look to source shares from somewhere and sell them thereby creating a short interest in stocks. They don't just go to zero weightings they go below.
So a short fund doesn't care about the index
A MSCI small cap fund is all about matching the index
Combining these two doesn't make any sense to me.
A major index fund will be holding all the top MC stocks. They might even have a holding in almost every traded company with a MC over say $5b. A major world-wide index fund (the sort that would use the MSCI index) either doesn't get down to holding "small" stocks like Core or holds only tiny amounts. Their tiny holding of small companies like Core means they are not an effective way to access large volumes of shares. Australian focused funds that hold all of the ASX200 or ASX300 are a much better candidate, as are actively managed funds that ignore the index weightings.
IMO the higher volumes today are coincidental not causal to the MSCI index changes that don't happen for a few weeks.
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