EDUCATIONAL INSIGHTS

WHAT'S NEW IN THE TOP 40? DEC 2017 INDEX REVIEW

Article by Satrix Investments

A summary of the December 2017 FTSE/JSE quarterly index review


TOP 40 CHANGE

At the December FTSE/JSE quarterly index review Netcare Limited (NTC) will be excluded and will be replaced by Resilient REIT Limited (RES) in the Top 40 index. The index rules dictate that Resilient ranked highly enough on its investable market cap to earn a place in the list of Top 40 companies, while Netcare (ranked at number 48) no longer makes the cut.


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.


SECTOR INDICES

To reiterate, index changes are all rules-based. Looking at two of the FTSE/JSE sector indices, Indi 25 and Fini 15, once the index review rules were applied, the result was that the shares that make up these indices remain the same for this December quarterly review. 

The review of the FTSE/JSE Resource 10 index resulted in Impala Platinum being deleted and Exxaro Resources being included.


SUMMARY OF INDICES WE TRACK AT SATRIX

Below we highlight the change in constituents that will be applied to the FTSE/JSE index series at the December 2017 review.


The December index review is effective on Monday 18 December 2017. 


Also see article What about STEINHOFF in your Satrix fund?


POSTED : 15 DECEMBER 2017

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