Will Rolls Royce be the UKs biggest company by market cap?

masonic

SneakySpectator said:

eskbanker said:

SneakySpectator said:

I tend to focus on company sizes because index funds are weighted by market cap. So the more market cap a stock has, the more of your money goes into it, even if you don't want it to.

But if you sign up to the concept of passive index investing, you intrinsically accept the lack of control over which specific entities you're ultimately invested in, whereas if you prefer a more active style of management then you'd skip indices and buy into your choice of individual equities instead.

Hypothetical question but let's say one say Nvidia ends up being 50% of the entire S&P500 index, would passive index trackers actually allocate 50p for every £1 into Nvidia? Or would they intervene and adjust it manually? 

A fund tracking the S&P500 will allocate 50% to the Nvidia. A fund tracking a different index would allocate something different, perhaps nothing. Some vehicles could find this problematic, since there are regulatory limits to observe.

Hoenir

SneakySpectator said:

eskbanker said:

SneakySpectator said:

I tend to focus on company sizes because index funds are weighted by market cap. So the more market cap a stock has, the more of your money goes into it, even if you don't want it to.

But if you sign up to the concept of passive index investing, you intrinsically accept the lack of control over which specific entities you're ultimately invested in, whereas if you prefer a more active style of management then you'd skip indices and buy into your choice of individual equities instead.

Hypothetical question but let's say one say Nvidia ends up being 50% of the entire S&P500 index, would passive index trackers actually allocate 50p for every £1 into Nvidia? Or would they intervene and adjust it manually? 

Few indices are pure market capitalisation. They are weighted in some way whether it be liquidity, free float, etc.  The problem for Nvidia growing to that level is that it's largest customers are the other megacap companies. It's their capital expenditure spend which will drive Nvidia's revenue and profit. To spend that amount of money they'll have to increase their own profitability proportionally. This will push their own share price up. Companies aren't islands they are part of an ecosystem.