ASX 300 RebalancingRebalancing is the process of removing or...

ASX 300 Rebalancing

Rebalancing is the process of removing or adding stocks in order to achieve a desired risk profile and to meet certain index requirements (e.g. liquidity, weighting). This usually occurs after asset valuations have deviated from initial values over a certain period of time. For the ASX 300, rebalancing occurs semi-annually and involves updating included shares and investable weight factors (IWFs). Eligible shares receive a review to determine their inclusion based on their relative ranking with other included shares. This is based on market capitalisation ranking and is subject to liquidity standards that must be met. Stocks that fail to meet the minimum liquidity threshold are removed from the ranking.

Buffers

The S&P employs exclusion and inclusion buffers to minimise turnover, a term used to identify the action of replacing one stock with another. A stock will be considered for inclusion once a current constituent stock reaches a rank below the deletion threshold. The potential company must also satisfy the addition ranking. Rankings are based on float-adjusted market capitalisation.

Rank Buffer for S&P/ASX 300
Addition - 274th or higher
Deletion - 326th or lower