EDUCATIONAL INSIGHTS

WHAT'S NEW IN THE TOP 40? MARCH 2020 INDEX REVIEW

Article by Satrix Investments

A summary of the March 2020 FTSE/JSE quarterly index review, effective Monday 23 March 2020.


TOP 40 CHANGES

At the March 2020 index review we see Reinet Investments and Northam Platinum Ltd entering the Top 40 index while The Foschini Group and Tiger Brands are 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.

MORE ON NINETY ONE plc

Ninety One is the new name of Investec Asset Management. Following the unbundling of Ninety One plc from Investec plc last week, the newly listed Ninety One was added to all indices that Investec plc was a part of (as per FTSE/JSE rule on unbundlings). Ninety One remains in the All Share Index, but is not eligible for the Top 40 and is therefore also deleted from the index effective 23 March 2020.


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 March 2020 review.

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 DIVIDEND PLUS INDEX

The Divi+ constituents are reviewed twice a year in March and September. The constituents will change as follows this quarter:

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 the following changes this quarter.

THE RAFI 40 INDEX

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. Ninety One plc remains in the RAFI 40 index, following its unbundling from Investec plc. The annual constituent review resulted in the following changes:

View our Products page for the details of constituents of all Satrix products.

All FTSE/JSE index changes can be viewed on the JSE website.



POSTED : 23 MARCH 2020

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