A lesser-known stock index lost its biggest driver after Tesla Inc. joined the S&P 500, potentially undercutting the performance of the highflying benchmark and several exchange-traded funds that track it.
The S&P Completion Index tracks all U.S. stocks except those in the S&P 500. The index is typically associated with mid, small and microcap stocks that fail to meet certain criteria for inclusion in the S&P 500. The presence of Tesla, the biggest stock in the completion index and the sixth-largest publicly traded company in the U.S., was something of an anomaly.
The electric car maker’s 677% surge this year propelled the completion index up 31%, doubling the gain of the S&P 500 over the same period.
Tesla owed its massive weighting in the index to its size and the fact that it took about a decade from its public-market debut to meet guidelines for inclusion in the S&P 500. S&P Dow Jones Indices formally added Tesla to the S&P 500 at the end of Friday’s trading session, thereby removing the stock from the completion index. Trading of the reconstituted indexes started Monday.
“It was the odd stock out,” said Ben Johnson, director of global ETF research at Morningstar Inc. “It’s a version of the 1990s Chicago Bulls having Michael Jordan sitting on the bench for 40 minutes of a game and has everything to do with the unique way S&P Dow Jones Indices manages that benchmark [the S&P 500].”