Who decides what's in the S&P 500?
Course 1 established that an index is a measuring stick — a published list plus a formula. But someone writes that list. And because trillions of index-fund dollars must buy whatever the list says, the quiet act of editing it moves real money.
Rules plus judgment
Major indices are maintained by index providers — specialist firms whose committees apply published criteria. For the S&P 500, a US company needs (among other things) sufficient size, enough freely tradable shares, adequate liquidity — and, notably, recent profitability. Meeting the bar makes you eligible; a committee makes the final call at scheduled reviews and as events (mergers, collapses) force changes.
Other families run closer to pure rules: many global indices simply rank by size and cut at a line — no committee taste involved. Both models exist; both are documented publicly. The stick is man-made, and its blueprint is readable.
When the list changes
Watch what happens on an index inclusion: every fund tracking the index must buy the newcomer — a wall of scheduled, price-insensitive demand (remember the "quiet giants" from Unit 1). Deletion runs the film backward. Nothing about the business changed that day; only the list did.
That demand used to move the price, too. S&P 500 additions gained about 7.4% on average around the announcement in the 1990s — the famous "index effect". It has since faded to roughly 0.3% over the last decade, with deletions near −0.1%. And here is the genuinely interesting part: it faded while the money tracking indices kept growing. The forced-buying story predicts the opposite — more trackers, bigger jump. Instead, other traders learned to position ahead of a change everybody can see coming, and they absorb the flow. Index power is still plainly visible on rebalance day, but in the volume, not in a free price jump.
One company, many lists
Your anchor company probably sits in several indices at once: a broad national index, maybe a mega-cap subset, a sector index, global indices. Each is a different lens; "the market" you hear about on the news is just the most famous lens for your country.
In the data
The committee's edits are dated. At the September 2026 quarterly review, Illumina was added to the S&P 500, effective Monday 21 September; the index funds had to own it by the close on Friday the 18th. Here is Illumina's trading around that Friday:
Look at the volume column, not the price. On the Friday the funds bought, about ten times an ordinary day's shares changed hands, and the next Monday trading was back to normal. That is the index effect as it looks today: plainly visible, in the volume, and without a free price jump. The dates matter for a second reason. Today's member list answers only "who is in it now"; a question like "who was in it in 2015" needs the dated history of joins and departures, which you will need again when you meet survivorship bias in the next course.
Try it now
- Find which major indices include a company. A profile carries no list of indices, but it carries the next best thing: the funds that hold it, and an index fund is named after the index it copies. Apple's ten largest fund holders are below. Read the names and write down every index you can identify — a total-market index, the S&P 500, a growth index, the Nasdaq-100 behind QQQ, a technology-sector index. For your own anchor company, open its holders in the Terminal and change the symbol there.
Open AAPL.US — holders in the EODHD Terminal
- How many indices track your country's market alone? Every index in the data carries a country. We counted them on 28 September 2026: 1,676 indices, of which 903 are tagged USA, 92 India, 43 France, 38 UK and 14 Germany, with 327 carrying no country at all. Set your own country's count against the one broad index its news quotes.
- Hold the thought from Unit 1: the top holders of your company were index managers — now you know exactly what instruction they're following.