EDUCATIONAL INSIGHTS

WHAT'S NEW IN THE TOP 40? SEP 2018 INDEX REVIEW

Article by Satrix Investments

A summary of the September 2018 FTSE/JSE quarterly index review, effective Tuesday 25 September 2018.


TOP 40 CHANGES

At the September 2018 index review we see Reinet Investments entering the Top 40 index while Gold Fields Ltd is excluded. According to the index rules, a security will be included in the index if it rises to position 35 or above, when the eligible securities are ranked by investable market capitalisation. A security that falls to position 46 or below will be excluded. The same constituent change is also applicable to the equally weighted version of the Top 40 index.

HOW IT WORKS

Index changes are triggered entirely by index rules. An index has a very clearly defined methodology and calculation method as specified by the index provider (eg FTSE/JSE, MSCI, S&P Dow Jones). There are specified rebalancing periods - FTSE/JSE indices are rebalanced quarterly in March, June, September and December.

There are various elements of the index calculation that can change, for example a company's number of shares-in-issue can change, or there can be a change in the investability of the share (how much of the company's shares trade freely on the exchange). All these changes impact the weight of the share in the index. Satrix will replicate these changes so that the funds you invest in always mimic the index you want to track.


SUMMARY OF INDICES SATRIX TRACKS

Below we highlight the change in constituents that will be applied to the FTSE/JSE index series at the September 2018 review.

SECTOR INDICES

Two of our sector ETFs (Satrix Indi 25 and Satrix Resi 10) track capped indices.

Capping is applied at 30% and this means that no company in the index will have a weighting higher than 30% at index review dates.


THE MID CAP INDEX

Following the top 40 companies, this next segment of medium caps has approximately 60 companies. The FTSE/JSE Mid Cap Index has quite a few changes this quarter. All shares being excluded are now classified as small caps, except Pepkor Holdings which moves to the FTSE/JSE Large Cap Index.


NO CONSTITUENT REVIEW THIS QUARTER

The constituents of the FTSE/JSE Rafi 40 index are only reviewed once a year, in March. A capping of 10% is applied to this index at each quarterly review.



POSTED : 23 SEPTEMBER 2018

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