S&P Dow Jones Indices Announces Update to S&P Composite 1500 Market Cap Guidelines

Rhea-AI Summary

S&P Dow Jones Indices (SPGI) has announced updated market capitalization eligibility criteria for the S&P Composite 1500 Indices, effective January 2, 2025. The new thresholds are: $20.5 billion or more for S&P 500 (up from $18.0 billion), $7.4 billion to $20.5 billion for S&P MidCap 400 (previously $6.7-18.0 billion), and $1.1 billion to $7.4 billion for S&P SmallCap 600 (previously $1.0-6.7 billion).

These ranges target specific percentiles of the S&P Total Market Index: 85th for S&P 500, 85th-93rd for MidCap 400, and 93rd-99th for SmallCap 600. Companies must also maintain a float-adjusted market cap of at least 50% of their respective index's minimum threshold. These criteria apply to new additions only, not existing members.

Positive

• Increased market cap requirements reflect market growth and maintain index quality
• Clear percentile targeting ensures systematic index composition

Negative

• None.

Insights

Market Research Analyst

The updated market capitalization thresholds for S&P indices represent a 13.9% increase for S&P 500 entry requirements to $20.5 billion, reflecting significant market expansion and inflation adjustments. This recalibration impacts index fund compositions and could trigger portfolio rebalancing across the investment landscape.

The new guidelines maintain strict segmentation between large, mid and small-cap markets, with the S&P 500 capturing the top 85th percentile of the market. The elevated thresholds create a more exclusive club for large-cap stocks, potentially affecting companies near the previous borderline of $18 billion who must now meet higher standards for inclusion.

For institutional investors, these changes signal a need to reassess holdings in transition zones between indices, particularly in the $18-20.5 billion range where stocks might shift between large and mid-cap classifications. The ripple effects could influence billions in passive investment vehicles tracking these indices.

Financial Analyst

The threshold adjustments reflect market dynamics and could trigger significant passive fund flows. The increased minimum for S&P 500 inclusion by $2.5 billion creates a higher barrier to entry, potentially benefiting existing constituents through reduced competition for index slots. Mid-cap companies near the new thresholds face heightened scrutiny as they approach potential index transitions.

Index inclusion remains asymmetric - while entry requires meeting new thresholds, existing members won't be automatically removed if they fall below. This creates a stability buffer but also means fewer opportunities for new entrants. The 50% float-adjusted market cap requirement adds another layer of qualification, ensuring only highly liquid, widely-held stocks gain entry.

For SPGI shareholders, these changes reinforce the company's position as a critical market infrastructure provider, potentially driving increased demand for index licensing and related services as funds adapt to new guidelines.

NEW YORK, Jan. 2, 2025 /PRNewswire/ -- S&P Dow Jones Indices ("S&P DJI") is updating the market capitalization eligibility criteria for additions to the S&P Composite 1500 Indices. Effective January 2, 2025, the size ranges will be updated as follows:

Previous Market Capitalization Eligibility Criteria		Updated Market Capitalization Eligibility Criteria
Unadjusted company market capitalization of:		Unadjusted company market capitalization of:
•	US$ 18.0 billion or more for the S&P 500	•	US$ 20.5 billion or more for the S&P 500
•	US$ 6.7 billion to US$ 18.0 billion for the S&P MidCap 400	•	US$ 7.4 billion to US$ 20.5 billion for the S&P MidCap 400
•	US$ 1 billion to US$ 6.7 billion for the S&P SmallCap 600	•	US$ 1.1 billion to US$ 7.4 billion for the S&P SmallCap 600

These market capitalization ranges are reviewed at the beginning of every calendar quarter, updated as needed to ensure they reflect current market conditions, and are expressed in dollar ranges. These minimum market capitalization guidelines are designed to capture the three-month average cumulative total company level market capitalization of the S&P Total Market Index ("TMI") universe at approximately the following cumulative percentiles:

• S&P 500 – 85th percentile
• S&P MidCap 400 index – 85th-93rd percentile
• S&P SmallCap 600 index – 93rd-99th percentile

Companies passing the total company-level market capitalization criteria must also have a security level float-adjusted market capitalization (FMC) that is at least 50% of the respective index's total company-level minimum market capitalization threshold.

As a reminder, the market capitalization eligibility criteria are for additions to an index, not for continued membership. As a result, an index constituent that appears to violate criteria for addition to that index is not removed unless ongoing conditions warrant an index change.

A history of market cap ranges dating back to 2007 can be found in Appendix A of the U.S. Indices methodology. The U.S. Indices methodology document will be updated soon to reflect the changes. Please visit our website www.spglobal.com/spdji for further details.

For more information about S&P Dow Jones Indices, please visit www.spglobal.com/spdji

ABOUT S&P DOW JONES INDICES

S&P Dow Jones Indices is the largest global resource for essential index-based concepts, data and research, and home to iconic financial market indicators, such as the S&P 500® and the Dow Jones Industrial Average®. More assets are invested in products based on our indices than products based on indices from any other provider in the world. Since Charles Dow invented the first index in 1884, S&P DJI has been innovating and developing indices across the spectrum of asset classes helping to define the way investors measure and trade the markets.

S&P Dow Jones Indices is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies, and governments to make decisions with confidence. For more information, visit www.spglobal.com/spdji.

FOR MORE INFORMATION:

S&P Dow Jones Indices
index_services@spglobal.com

Media Inquiries
spdji.comms@spglobal.com

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SOURCE S&P Dow Jones Indices

FAQ

What are the new market cap requirements for S&P 500 index inclusion in 2025?

Effective January 2, 2025, companies must have an unadjusted market capitalization of $20.5 billion or more to be eligible for S&P 500 index inclusion, up from the previous $18.0 billion threshold.

What are the updated market cap ranges for S&P MidCap 400 index in 2025?

The new market cap range for S&P MidCap 400 inclusion is $7.4 billion to $20.5 billion, increased from the previous range of $6.7 billion to $18.0 billion.

What is the minimum market cap requirement for S&P SmallCap 600 index in 2025?

The minimum market cap requirement for S&P SmallCap 600 inclusion is $1.1 billion, with an upper limit of $7.4 billion, adjusted from the previous range of $1.0 billion to $6.7 billion.

How does SPGI determine the market cap ranges for its indices?

SPGI reviews market cap ranges quarterly, targeting specific percentiles of the S&P Total Market Index: 85th for S&P 500, 85th-93rd for MidCap 400, and 93rd-99th for SmallCap 600.

What float-adjusted market cap requirement must companies meet for index inclusion?

Companies must maintain a float-adjusted market capitalization of at least 50% of their respective index's total company-level minimum market capitalization threshold.