New methods for calculating the S&P 500 Index will prompt billions of outflows from 33 leading mutual fund companies
Mutual fund companies will withdraw assets from blue-chip companies like Wal-Mart when Standard & Poors moves to eliminate illiquid shares from its flagship S&P 500 Index, Bloomberg reports.
The shift in calculating S&Ps index will prompt mutual fund companies to reallocate between $38 billion and $45 billion out of companies like Wal-Mart , which is largely controlled by a handful of insiders. Roughly 9.2 billion shares in 33 large companies, also including United Parcel Service and MetLife Inc ., will also be sold.
S&P is scheduled to announce its new index realignment for the S&P 500, MidCap 400 and SmallCap 600 indexes on Sept. 28. These indexes will shift from a "free float" calculation method to a quantitative approach resembling strategies employed at index management groups within Russell Investment Group and Morgan Stanley Capital International, Inc.