Index inclusion describes a company's stock being added to a major market index like the S&P 500, MSCI, or FTSE. This pivotal event often generates significant...
Index inclusion refers to the process where a company's shares are added to a major stock market index, such as the S&P 500 or MSCI Emerging Markets, making it part of a benchmark that many investment funds track.
It typically leads to increased demand from passive funds tracking the index, boosting trading volume, liquidity, market visibility, and potentially the stock price.
Key criteria often include market capitalization, liquidity, profitability, public float percentage, and the company's listing exchange, though specific rules vary by index provider.
Many stocks experience an 'index inclusion rally' as passive funds buy shares to rebalance their portfolios, often leading to a temporary or sustained price increase before and after the inclusion date.