That's not an effect. As both in the case of a dividedend and a stock buy back, the company's market cap drops by the amount of cash that's being distributed ou

That's not an effect. As both in the case of a dividedend and a stock buy back, the company's market cap drops by the amount of cash that's being distributed out, creating an identical re-buying situation in market cap-weighted index funds. Stock price itself is irrelevant for index fund rebalances (unlike for shareholder returns).