S&P TO ADJUST BIG TECH WEIGHTAGE IN UNITED STATES MARKET

In the era of Big Tech, the US stock market has become extremely top heavy in proportion to its market capitalisation.

- RAJIV KAPOOR

The index barometer, the S&P has decided to reduce the weightage of the market leaders proportionately in case they breach the size related thresholds in the key industry benchmark indices.

There has been a rising concentration risk over the last few years with a handful of bluechip technology companies hitting regulatory limits without any capping. Currently in the S&P index when any preset threshold is triggered or breached then the smallest of the group gets its weightage trimmed at first. But now with the changes in the S&P capping methodology taking effect from 20 August 2024 there will be many passive investment vehicles or ETFs particularly from the technology sector shuffling their holdings to reset their imbalance.