MSCI has confirmed that it will remove Strategy (MSTR) from its global indexes, after determining that such companies operate more like investment funds, Investing.com reported. Strategy had warned that an MSCI exclusion would result in $2.8 billion of its stock being liquidated.

Strategy shares were down 6.4 percent in premarket trading at 7:03 a.m. ET on Thursday, Nov. 12, Reuters reported.

The decision is about one company. The way it works applies to anyone who owns an index fund, including through a workplace retirement plan.

What an index provider does

An index is a list of companies chosen by a set of published rules. Companies such as MSCI, S&P Dow Jones Indices and FTSE Russell write those rules, maintain the lists and change them when a company no longer fits.

MSCI's decision on Strategy follows that pattern. Last year it proposed removing digital-asset treasury companies whose holdings are more than 50 percent of their total assets, as part of a review of "non-operating companies," according to Investing.com. Metaplanet is also slated for removal.

Why funds follow

An index fund's job is to track its benchmark. When a company leaves the benchmark, a fund that tracks it generally sells that company's shares. When a company joins, the fund generally buys.

The fund manager is not making a judgment about the company's prospects in that case. The fund is following its rule.

That is why a company can warn about selling before it happens. Strategy's $2.8 billion figure is its own estimate of what an MSCI exclusion would mean for its stock.

How it reaches a retirement account

A 401(k) or an IRA is a container. What sits inside it is what you choose to hold, often mutual funds or exchange-traded funds.

If one of those funds tracks an index, its holdings change when the index changes. The saver does not place the trade. The fund does, inside the account.

What it means for a saver

For a broad fund holding many companies, one removal usually changes a small part of the portfolio. For a narrower fund, the same change can be a larger share.

A fund's materials name the benchmark it tracks. That name tells a saver whose rules are deciding what the fund owns.

The change also runs in both directions. The same rules that remove a company can add one, and an index fund generally buys when that happens.

None of this calls for action by itself. An index change is a routine part of how these funds work, not a sign that a fund has failed.

The market around it

Crypto prices were also lower on Thursday morning. Bitcoin was down 0.7 percent at $73,507 at 5:34 a.m. ET on Thursday, and Ether was down 0.5 percent at $2,049.96, Investing.com reported. Crypto prices fell sharply through October and early November, according to the same report.