Why are indices important to fund managers and how would they affect their investment decisions? What is an index reconstitution? Why does this happen? How would it affect a fund manager? Calculate the Standard Deviation of Innoviva, FCB and the Russell 2000. If a fund manager were to add a 2% position in either Innoviva or FCB, how would that affect the standard deviation of the portfolio? Assume the other 98% of the managers portfolio can be approximated by the Russell 2000 and calculate the Russell 2000, with the manager adding Innoviva. Repeat this again for adding FCB..