Who is eligible for S&P 400?
Eligibility for inclusion in the S&P 400, a widely recognized mid-cap stock market index, is primarily determined by specific market capitalization criteria for initial addition.
Understanding the S&P 400
The S&P 400, formally known as the S&P MidCap 400, is a prominent stock market index curated by S&P Dow Jones Indices. Its purpose is to track the performance of mid-sized companies within the U.S. equity market. These companies typically represent a market capitalization segment larger than small-cap firms but smaller than the large-cap corporations found in the S&P 500.
Key Eligibility Criterion for Inclusion: Market Capitalization
For a company's stock to be considered for addition to the S&P 400 index, a fundamental requirement centers on its total market capitalization. This criterion helps ensure that newly included companies align with the "mid-cap" definition of the index.
Specifically, to be eligible for addition to the S&P 400, a stock must possess a total market capitalization that falls within a clearly defined range.
Market Capitalization Requirements for S&P 400 Addition
| Criterion | Details |
|---|---|
| Total Market Capitalization | Ranges from $6.7 billion to $18.0 billion |
It is important to note that these market capitalization criteria are specifically applied for adding a stock to the index. A company's market capitalization may fluctuate outside this range after its initial inclusion due to market dynamics, and such fluctuations do not automatically lead to its removal. The criteria for continued membership in the index differ from those for initial entry.
Beyond Market Capitalization
While market capitalization serves as a primary gateway for new additions to the S&P 400, S&P Dow Jones Indices typically assesses several other factors for overall index eligibility and maintenance. These often include:
- Profitability: Companies generally need a track record of positive earnings.
- Liquidity: The stock must be sufficiently traded to ensure ease of buying and selling without significant price impact.
- Public Float: A substantial portion of the company's shares must be available for public trading, excluding privately held or restricted shares.
- Domicile: Companies must typically be domiciled in the United States.
- Sector Representation: Considerations are made to ensure the index remains a balanced and representative reflection of various industry sectors.
However, the specified market capitalization range of $6.7 billion to $18.0 billion is a direct and pivotal determinant for considering a stock for initial inclusion in the S&P 400.
