The group hopes indexers will deter at least some founders of future startups from going public with multiple classes of shares carrying unequal voting rights, Borrus said. Still, the S&P’s ruling only applies to new entrants to its main indexes, with the likes of Facebook and Alphabet grandfathered in. Companies with multiple share classes remain eligible for the S&P BMI Global Indices and the S&P Total Market Index.
The shift could however provide a much-needed boost to active managers, who’ve struggled to demonstrate their value versus passive funds that have often performed as well or better. If some indexers can’t buy a particular stock, active managers could step in.
“This could be the rare case where both active and passive cheer,” said Balchunas.
This article was provided by Bloomberg News.