Components of Passive Equity Index Construction

Passive equity investing involves a strategy that aims to replicate the performance of a specific index rather than attempting to outperform the market through active management. When constructing an index for passive investment, it is crucial to consider various factors that influence its construction and maintenance.

Discuss the key components involved in the construction of an equity index, including but not limited to, selection criteria, weighting methodologies, and rebalancing processes. Furthermore, explain how these components impact the performance and risk profile of the index.