After the market close on Friday, S&P Dow Jones Indices announced its quarterly rebalance of the S&P/ASX Indices.
This latest update reveals that there will be three ASX shares kicked out of the benchmark ASX 200 index later this month.
Let's now take a look at which shares are being removed and then what will be replacing them.
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Which ASX 200 shares are leaving the ASX 200?
The ASX 200 shares that have been kicked out are property companies Cromwell Property Group (ASX: CMW) Growthpoint Properties Australia Ltd (ASX: GOZ), and administration services company Link Administration Holdings Ltd (ASX: LNK).
Over the last 12 months, their shares have fallen 40%, 28%, and 61%, respectively. This has dragged their market capitalisations to a level that means there are now more suitable options for ASX 200 index inclusion.
The bad news for the evicted ASX 200 shares is that selling pressure could now increase. That's because index funds that track the ASX 200 will be forced to sell their shares. In addition, fund managers that have strict investment mandates may have to sell if they aren't permitted to invest outside the benchmark index.
What are the new additions?
Joining the ASX 200 index on 18 December will be uranium developer Boss Energy Ltd (ASX: BOE), mortgage insurer Helia Group Ltd (ASX: HLI), formerly known as Genworth Mortgage Insurance Australia, and fleet management and salary packaging company Smartgroup Corporation Ltd (ASX: SIQ).
Their shares are up 78%, 51%, and 70%, respectively, over the last 12 months.
And, in contrast to the three companies that have been kicked out, they could experience an increase in demand for their shares as index funds buy shares and they become available to fund managers with the aforementioned investment mandates.
