FTSE 250 9 March at 6:11PM in Savings & investments 4 replies 216 views

sevenhills

Do shares that go into or leave the FTSE 100/250 etc increase/decrease in value?
When a share is likely to go into a FTSE tracker, will that buying power increase the share price?
I was just reading about the possibility of 888 Holdings leaving the 250

RedImp_2

If I understand correctly these indices measure the 100 / 250 highest value companies so in that respect dropping out is a good indicator their value is dropping.
Whether actually dropping out of the index then has an additional effect on share price I don’t know but would doubt it.

sgog

It is likely that by the time you read it, algos have already factored in the exit and have sold the share to adjust its price and profit from the arbitrage.

I'm not saying it cannot go down further due to herd effects, but that may just mean that the algo underweighted the news, although it can also go in the other direction.
And then of course there's natural market variability.

masonic

They will continue to be held by FTSE All-share trackers, sold by FTSE 250 trackers and bought by FTSE 100 trackers. People tend to get excited about promotions, and there is bound to be some effect, but a share that recently fell 30% when its CEO quit is probably not one to buy (or short) for this reason. Who knows what other news is around the corner.

wmb194

sevenhills said:

Do shares that go into or leave the FTSE 100/250 etc increase/decrease in value?
When a share is likely to go into a FTSE tracker, will that buying power increase the share price?
I was just reading about the possibility of 888 Holdings leaving the 250

I haven't heard anything about this recently but yes, it certainly used to be a thing, where the trackers would rebalance in the days before and after a promotion and you could attempt a quick turn. IIRC it worked best when the company had a relatively small free float. You don't need to guess, though, and it shouldn't be too hard to research this.