The Life360 Inc (ASX: 360) share price is having a very strong start to the week.
At the time of writing, the location technology company's shares are up 13% to $5.40.
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Why is this ASX tech share rocketing higher?
Investors have been fighting to get hold of this ASX tech share on Monday in response to an announcement out of S&P Dow Jones Indices.
On Friday, the index solutions company released its latest quarterly rebalance of the S&P/ASX Indices and revealed four changes to the benchmark ASX 200 index.
S&P Dow Jones Indices advised that building materials company Adbri Ltd (ASX: ABC), battery technology company Novonix Ltd (ASX: NVX), gold miner Ramelius Resources Ltd (ASX: RMS), and fleet management company Smartgroup Corporation Ltd (ASX: SIQ) will all be kicked out of the index later this month on 20 March.
Life360 added to the ASX 200 index
One of the companies that will be added to the index in their place is Life360, which has evidently gone down well with investors.
And it isn't hard to see why. When a company is added to the ASX 200 index, it has the potential to give its shares a big boost. That's because index funds that track the index have to buy shares in order to reflect its inclusion.
In addition, many large fund managers have strict investment mandates that prevent them from buying ASX shares that are not included in the ASX 200 index. So, if any of these fund managers have been wanting to buy this ASX tech share but have been unable to do to their mandates, they are now able to.
And judging by the Life360 share price performance today and the large volume of trades, it appears that some could be doing just that.
