Free-Float Methodology

A free-float methodology is a method by which the market capitalization of an index’s underlying companies is calculated. Free-float methodology market capitalization is calculated by taking the equity’s price and multiplying it by the number of shares readily available in the market. Instead of using all of the active and inactive shares, as with the full-market capitalization method, the free-float method excludes locked-in shares such as those held by insiders, promoters and governments.