Managing the S&P 500 Index Still Needs the Human Touch
A secret committee decides who enters and leaves the stock benchmark.
Michael Saylor, co-founder and executive chairman of MicroStrategy Inc., is still searching for a path to the S&P 500 index.
Photographer: Bloomberg/BloombergThe third Friday in September is a special day in the financial-market calendar. It’s one of the four days a year the S&P 500 index gets rebalanced. With over $10 trillion of assets passively tracking it, the exercise will affect markets and investors in every corner of the world.
Yet unlike other indexes, the S&P 500 isn’t governed by hard rules. While most benchmarks follow mechanical formulas – automatically adding companies that hit market-capitalization thresholds or liquidity criteria – the S&P 500 relies on human judgment. A small committee at S&P Dow Jones Indices makes the final call on every addition and deletion. (Bloomberg LP competes with S&P Global in providing indexes, including the the Bloomberg 500.)