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S&P Dow Jones Indices Announces Update to S&P Composite 1500 Market Cap Guidelines

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S&P Dow Jones Indices updates market capitalization eligibility criteria for S&P Composite 1500 Indices, effective April 1, 2024. The size ranges for S&P 500, MidCap 400, and SmallCap 600 have been adjusted to ensure they reflect current market conditions.
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The revision of market capitalization eligibility criteria by S&P Dow Jones Indices represents a significant adjustment that reflects shifts in market dynamics and economic conditions. It's important to note that the increases in capitalization thresholds can potentially influence the composition of the S&P 500, MidCap 400 and SmallCap 600 indices. Companies on the cusp of these new thresholds may need to reassess their market strategies and investor relations efforts to maintain or achieve the visibility that comes with index inclusion.

Index inclusion can lead to increased demand for a company's stock, as funds tracking the indices adjust their portfolios. This often results in what is known as the 'index effect,' where stocks added to an index typically experience positive returns. Conversely, companies that fail to meet the new thresholds might see reduced investor interest and potential selling pressure from index funds. This recalibration of the indices will necessitate vigilance from investors, as market capitalizations of companies will need to be monitored more closely for potential inclusion or exclusion from these indices.

From a financial perspective, the updated market capitalization eligibility criteria have implications for liquidity and market stability. Larger market capitalizations often correlate with greater liquidity, which can reduce transaction costs and price volatility. As such, the new criteria could lead to a more stable trading environment for index constituents. Moreover, the adjustment in capitalization thresholds may reflect an attempt by S&P DJI to ensure that the indices more accurately represent the current state of the market, especially considering inflationary pressures and market growth over time.

Investors should be aware that these changes could affect the weightings of current index constituents, potentially leading to rebalancing of portfolios that track these indices. It's also worth considering the impact on active fund managers, who may need to adjust their benchmarks and strategies in response to these changes. Long-term, the market cap adjustments may signal a recalibration of what constitutes 'small-cap,' 'mid-cap,' and 'large-cap' in the evolving market landscape.

NEW YORK, April 1, 2024 /PRNewswire/ -- S&P Dow Jones Indices ("S&P DJI") is updating the market capitalization eligibility criteria for additions to the S&P Composite 1500 Indices. Effective April 1, 2024, the size ranges will be updated as follows:

Previous Market Capitalization Eligibility Criteria

Updated Market Capitalization Eligibility Criteria

Unadjusted company market capitalization of:

•  US$ 15.8 billion or more for the S&P 500

•  US$ 5.8 billion to US$ 15.8 billion for the S&P MidCap 400

•  US$ 900 million to US$ 5.8 billion for the S&P SmallCap 600

Unadjusted company market capitalization of:

•  US$ 18.0 billion or more for the S&P 500

•  US$ 6.7 billion to US$ 18.0 billion for the S&P MidCap 400

•  US$ 1 billion to US$ 6.7 billion for the S&P SmallCap 600

These market capitalization ranges are reviewed at the beginning of every calendar quarter, updated as needed to ensure they reflect current market conditions, and are expressed in dollar ranges. These minimum market capitalization guidelines are designed to capture the three-month average cumulative total company level market capitalization of the S&P Total Market Index ("TMI") universe at approximately the following cumulative percentiles:

  • S&P 500 – 85th percentile
  • S&P MidCap 400 index – 85th-93rd percentile
  • S&P SmallCap 600 index – 93rd-99th percentile

Companies passing the total company-level market capitalization criteria must also have a security level float-adjusted market capitalization (FMC) that is at least 50% of the respective index's total company-level minimum market capitalization threshold.

As a reminder, the market capitalization eligibility criteria are for additions to an index, not for continued membership. As a result, an index constituent that appears to violate criteria for addition to that index is not removed unless ongoing conditions warrant an index change.

A history of market cap ranges dating back to 2007 can be found in Appendix A of the U.S. Indices methodology. The U.S. Indices methodology document will be updated soon to reflect the changes. Please visit our website www.spglobal.com/spdji for further details.

For more information about S&P Dow Jones Indices, please visit www.spglobal.com/spdji

ABOUT S&P DOW JONES INDICES

S&P Dow Jones Indices is the largest global resource for essential index-based concepts, data and research, and home to iconic financial market indicators, such as the S&P 500® and the Dow Jones Industrial Average®. More assets are invested in products based on our indices than products based on indices from any other provider in the world. Since Charles Dow invented the first index in 1884, S&P DJI has been innovating and developing indices across the spectrum of asset classes helping to define the way investors measure and trade the markets.

S&P Dow Jones Indices is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies, and governments to make decisions with confidence. For more information, visit www.spglobal.com/spdji.

FOR MORE INFORMATION:

S&P Dow Jones Indices
index_services@spglobal.com

Media Inquiries
spdji.comms@spglobal.com

Cision View original content:https://www.prnewswire.com/news-releases/sp-dow-jones-indices-announces-update-to-sp-composite-1500-market-cap-guidelines-302104903.html

SOURCE S&P Dow Jones Indices

FAQ

What are the updated market capitalization eligibility criteria for the S&P 500, MidCap 400, and SmallCap 600 indices?

The updated market capitalization ranges are: US$ 18.0 billion or more for the S&P 500, US$ 6.7 billion to US$ 18.0 billion for the MidCap 400, and US$ 1 billion to US$ 6.7 billion for the SmallCap 600.

How often are the market capitalization ranges reviewed and updated?

The market capitalization ranges are reviewed at the beginning of every calendar quarter and updated as needed to reflect current market conditions.

What percentile of the S&P Total Market Index universe do the market capitalization guidelines aim to capture?

The guidelines aim to capture the 85th percentile for the S&P 500, 85th-93rd percentile for the MidCap 400, and 93rd-99th percentile for the SmallCap 600.

What is the requirement for the security level float-adjusted market capitalization (FMC) in relation to the total company-level minimum market capitalization threshold?

Companies must have an FMC that is at least 50% of the respective index's total company-level minimum market capitalization threshold.

Are the market capitalization eligibility criteria for additions or continued membership in an index?

The criteria are for additions to an index, not for continued membership. Companies violating criteria for addition are not removed unless ongoing conditions warrant an index change.

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