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.

Run a CAPM and 3 Factor model for each of these stocks. Use the Russell 2000 as the market return. According to the market beta, which of these firms is riskier.