Indexes and Exchange-Traded Funds
Research and select an equity index based on the following category assignments: for last names that begin with M through P: U.S. style, any cap
In your initial post (minimum 300 words),
Identify the following facts for your selected index:
name
representation
number of securities
weighting method
rebalancing frequency
Identify any changes (“reconstitution”) of the index within the past 3 years.
Include APA Style reference(s) and links to the source(s) of this information.
Evaluate the return performance of this index over the most recent 1-, 3-, and 5-year time periods.
Discuss the pros and cons of investing directly in an index.
Sample Solution
For this assignment, I chose the S&P 500 Value Index as my U.S. style equity index for last names that begin with M through P. This index seeks to measure the performance of large-cap value stocks within the S&P 500 universe of securities and is calculated using a float-adjusted market capitalization weighting methodology.
The S&P 500 Value Index represents approximately 80% of the total U.S. stock market capitalization, contains 505 stocks and has been rebalanced on a quarterly basis since its inception in May 2006 — most recently being reconstituted in March 2021 when one stock was added while another was removed from its composition.
Furthermore, prior to this reconstitution process three other small adjustments were made over past three years: In January 2018, two stocks were added while one was removed while in 2019 none were changed and 2020 only saw one adjustment when an additional stock was included into portfolio.
