The investment vehicle of Bill Ackman, pictured, will be added to the FTSE 100 after the close of trade on December 18 © Bloomberg

Elevation to the premier league is always a coup. The UK corporate version, the FTSE 100, is welcoming Pershing Square Holdings, a fund of New York hedgie Bill Ackman. The index is kicking out HomeServe. The reshuffle maintains sectoral norms. The benchmark is heavily tilted towards conventional finance — a fifth of its weighting — and is predictably low on home repairs groups.

But is it more than a badge of honour? Countries lobby tooth and nail for inclusion in MSCI’s elite indices; South Korea has spent the best part of two decades pushing for promotion from emerging to developed market status, an elevation that would lead to a bigger pool of investors. While FTSE Russell bumped the country up in 2009, the MSCI has yet to be swayed. The inclusion of Chinese mainland stocks in MSCI’s flagship emerging markets index in 2018 made them eligible for investment by $1.6tn of global funds under management.

Capital flows are at stake for FTSE constituents too. About $27bn of passive money tracks the FTSE 100; far more active — or “closet passive” — cash follows suit. Research suggests anticipation alone can do the trick. Chasing that bump, Mr Ackman has gone so far as to switch management shares into public shares. He has also rued a buyback — without which, he reckons, he would have secured enough market worth to win a place in the index earlier.

Elevation should bring some of the gloss afforded to rivals. Scottish Mortgage Investment Trust, a £16bn vehicle, trades roughly at net asset value. Pershing has seen its own discount almost halve, but it remains a chunky 22 per cent.

As a US-managed hedge fund investing predominantly in US assets — and which only recently recovered from bad bets in Herbalife and drugmaker Valeant — Pershing is still something of an oddity in the UK universe. Liquidity only goes so far in bumping up a share price. SMIT’s appeal has been its zeitgeisty tech investments. More prosaically, Mr Ackman favours retailers of burritos and DIY gear.

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