Definitions
In plain terms
If a constituent exceeds a 10% cap, excess weight is redistributed according to the methodology rather than discarded.
Technical
Capping requires cap levels, groups, hierarchy, redistribution algorithm, convergence and tolerance, rounding, effective date, buffer rules, and infeasibility handling.
Scope
Capped does not imply one universal threshold or one-pass calculation.
Examples
- A governed index record identifies capped index with its applicable methodology version, effective time, source, and units.
Common misconceptions
- Capped Index does not have one universal implementation without the named index methodology, data cutoff, and governance context.
Concept relationships
Where this concept is used
- PrimaryCapped Free-Float Market-Cap IndexD03-F02-A04
- ImportantModified Market-Cap IndexD03-F02-A05
- PrimaryIterative Cap RedistributionD03-F02-A07
- PrimaryGroup-Level CappingD03-F02-A08
- ImportantDividend-Yield-Weighted IndexD03-F03-A02
- ImportantFactor-Score-Weighted IndexD03-F03-A03
- ImportantMinimum-Volatility IndexD03-F03-A04
- ImportantThematic-Tilt IndexD03-F03-A06
- ImportantRebalancing AlgorithmD03-F06-A06
- ImportantTurnover Buffer RuleD03-F06-A07
Evidence and governance
- FTSE Russell Index Policy and Methodology Library FTSE Russell, London Stock Exchange Group · first party methodology
Supports: preferred label, short definition, technical definition
Limits: The library links multiple documents with separate versions and applicability; the effective document must be identified.
- Fintech Builder Glossary Definition Contract The Fintech Builder · internal governed contract
Supports: variant distinction
Limits: Defines governed platform behavior rather than claiming these policies are universally prescribed by external McClellan methodology.
- Reviewed by
- fintech-builder-owner-approved
- Last reviewed
- 2026-07-27
- Next review
- 2027-07-27
- Record status
- published