Bernstein analysts noted ahead of the December shakeup that while new entrants meaningfully outperform the S&P 500 in the year before they’re added to the index, they see only mild outperformance in the five days following the announcement, “with relative returns continuing to trail off postannouncement.”
Stocks tend to get immediate bumps once they’re named as future S&P 500 entrants because there are trillions of dollars worth of assets invested in funds that track the S&P 500. Those index funds must buy up shares of the new arrivals.
(for mission)
