Culloton expects the changes to gradually faze in over the next couple of months and maybe well into 2013 before it is complete.
“They do this just to reduce the market impact cost and the transaction cost of the overall change,” Culloton said.
Once the change is implemented, investors will have to consider the indices’ exposure and allocations. Specifically, investors will need to watch out for changes in holdings, sectors, regions and market capitalization. For instance, FTSE does not categorize South Korea as an emerging market, whereas MSCI will included the country in its emerging market index.
Moreover, investors will have to keep an eye on turnover and tracking errors. If the new indices prove to be less efficient than expected, the ETFs will not perform as well as alternative options.
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Max Chen contributed to this article.