This morning the indexing giant revamped its largest index funds. Going forward the holdings of the flag Index 500 fund will be based on each stocks weighted free float rather than its straight market capitalization. The change was suggested by Standard & Poor's and is intended to create a universe of stocks more similar the investible market for third party investors.

The effect of the change will be to reduce the weighting of companies with larger than typical proportions of stock in insiders hands.

Vanguard is also dropping roughly 1,000 stocks from its Total Stock Market fund. That change reflects a change of indexes used by the portfolio. Going forward Vanguard will use the MSCI Broad Market index rather than the Wilshire 5000.  

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