Growth, value stocks set for reshuffle as S&P adopts new rules
Executive Brief • Key Highlights
Fast factual intelligence distilled for busy investors, executives, and answer bots:
- ✓S&P Dow Jones Indices adopted new rules to sort growth and value stocks.
- ✓The provider will add intangible assets and free cash flow to define value, while dropping price momentum.
- ✓These changes take effect on December 21.
Story at a Glance
- Category
- MARKET
- Reported By
- MoneyControl
- Reading Speed
- 2 Minute(s)
- Market Focus
- India Economy
Growth and value shares are set for an overhaul after S&P Dow Jones Indices adopted new rules on how to sort equities into the two investment styles. The index provider will add intangible assets, forward earnings and free cash flow to the list of factors to define whether a company is cheap relative to its share price, according to a statement Friday. At the same time, 12-month price momentum will be dropped as a criteria to rank a company's growth potential. The new rules came after a recent consultation and will take effect at the annual reconstitution before the market open on Dec.
21. The changes are poised to force index-tracking funds to adjust holdings to match the new constituents. Bloomberg Intelligence analyst James Seyffart estimated at least $375 billion of passive funds are tied to the affected gauges.
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