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Quarterly rebalance: NIB added to ASX 100, Jumbo & Polynovo added to ASX 200

A number of shares could be on the move on Friday after S&P Dow Jones Indices announced its September 2019 quarterly rebalance of the S&P/ASX Indices.

Below is a summary of the changes that have been made, effective at the open of trading on September 23.

S&P/ASX 100 index changes.

There is just one change to the S&P/ASX 100 this quarter. That change will see private health insurance company NIB Holdings Limited (ASX: NHF) added to the index at the expense of struggling fund manager Pendal Group Ltd (ASX: PDL).

S&P/ASX 200 index changes.

The benchmark S&P/ASX 200 index has seen six changes this quarter. Added to the index are quick service restaurant operator Collins Foods Ltd (ASX: CKF), gold miner Gold Road Resources Ltd (ASX: GOR), high-flying lottery ticket seller Jumbo Interactive Ltd (ASX: JIN), investment platform provider Netwealth Group Ltd (ASX: NWL), medical device company Polynovo Ltd (ASX: PNV), and WA-based gold miner Silver Lake Resources Limited (ASX: SLR).

They will be replacing Dreamworld operator Ardent Leisure Group Ltd (ASX: ALG), pharmacy chain operator and distributor Australian Pharmaceutical Industries Ltd (ASX: API), fleet management company Eclipx Group Ltd (ASX: ECX), earthmoving equipment rental company Emeco Holdings Limited (ASX: EHL), packaging company Pact Group Holdings Ltd (ASX: PGH), and another pharmacy chain operator and distributor, Sigma Healthcare Ltd (ASX: SIG).

What now?

When a company is added to an index it can lead to an increase in demand for its shares from exchange traded funds that are designed to track an index and from fund managers that may have investment mandates which permit them to only buy shares on certain indices.

Conversely, when shares are removed it can lead to increased selling pressure as exchange traded funds dump them and fund managers are forced to sell them. Because of this, I wouldn’t be surprised to see some of these shares pushing higher or sinking lower today.

Instead of buying the shares that were dumped from the S&P/ASX 200 index, I would be buying these highly rated shares that have been tipped as market beaters.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Netwealth. The Motley Fool Australia has recommended Collins Foods Limited, Jumbo Interactive Limited, and NIB Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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