Delistings are an often overlooked factor in investment performance, but their impact can be significant, particularly when it comes to index funds. Whether due to mergers, bankruptcies, or companies going private, delistings can affect both individual stockholders and those who invest through index funds. For investors focused on maximizing returns and minimizing risks, understanding how delisting works and its implication is critical. What is a Delisting? A delisting occurs when a company’s stock is removed from a stock exchange which can happen voluntarily or involuntarily. This creates liquidity issues, as delisted stocks are typically harder to trade and the resulting loss of liquidity often translates into a significant loss in value for shareholders. Types of Delistings: Voluntary Delistings: When a company opts to leave the stock exchange, typically because it wants to go private or it is merging with another firm. Involuntary Delistings: These occur when a company is forced off an exchange due to poor financial performance, the stock’s share price falling below a minimum threshold, or failure to comply with regulatory requirements. Impact on Index Funds Index funds, by design, track a specific