Big cap index reshuffle

The quarterly reshuffle will lift demand for new inclusions into the S&P ASX200

The quarterly reshuffle in the market indices will force a rebalancing in major index funds that could fuel demand for a handful of new inclusions.

Stocks to be included in the ASX 200 on September 20 include property developer and manager Cromwell Property Group (CMW) which has risen 35% in the past 12 months, mining services group Forge Group (FGE) which has jumped 40%, STW Communications (SGN) up 50% and New Zealand pay television group Sky Network Television (SKT) (see Brendon Lau's Three small caps morphing into market leaders).

Standard & Poor's criteria for inclusion in the index encompasses not just market capitalisation but also liquidity.

Given the rise in popularity of exchange traded funds and index funds in recent times, along with active funds that are mandated to trade large caps, the reweighting forces many funds to include the stocks in their portfolios.

Those being kicked out include the obvious suspects. Billabong (BBG) is front and centre along with a range of others included Discovery Metals (DML), mining services group Emeco (EHL), FKP Properties (FKP) and Mineral Deposits (MDL), companies that already have fallen foul of investors.

Forge Group and STW Communications are part of the Uncapped 100.

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