ORTEX is excited to announce a powerful new proprietary dataset: ORTEX Index Rebalance Predictions. All major stock market indexes conduct regular rebalances to adapt to evolving market conditions, which are often market-moving events. That’s especially true for widely-followed indexes, since there are more passively-managed index funds that are tracking them.
Passive investment strategies have grown in popularity in recent years due in part to lower costs, with passive fund inflows outpacing active fund inflows so far in 2022. For instance, there is now approximately $13.5 trillion in assets under management (AUM) that are being benchmarked to MSCI Indexes. That’s a lot of money that is required to be traded once index changes are revealed.
Significant index additions and deletions have important implications for trading dynamics, as index funds are obligated to track the changes. Additions lead to significant buying activity for a stock getting included in an index, while deletions will result in selling pressure. Being able to accurately predict these changes can yield profitable short-term returns for investors and traders. For example, when S&P Dow Jones Indices announced in November 2020 that Tesla (Nasdaq: TSLA) would join the prestigious S&P 500, shares of the electric vehicle maker rallied by 8.2% the following day.
We have developed a model that attempts to predict index changes in advance, based on public information about an index’s methodology and other factors. The dataset will also include an estimate for the total traded value potential, which represents the dollar value of stock that may need to be bought or sold. Predictions can be ranked based on Conviction levels, among other variables.
ORTEX Index Rebalance Predictions are only available to ORTEX Advanced users.
Our MSCI World predictions for this week
To start, we are releasing predictions for the upcoming changes in the MSCI World this week. This index, along with many other MSCI Equity Indexes, is about to change later this month. MSCI will announce changes on November 10, 2022, with the adjustments going into effect as of the close on November 30, 2022, so trading including the adjustments will commence on December 1. This will be MSCI’s most significant rebalance of the year, and will be closely followed by index fund managers.
We have spent many months developing this dataset, and are looking forward to sharing our full predictions with ORTEX users. To celebrate, here is a glimpse of a few High Conviction tickers that we strongly believe will see changes in the MSCI World Index this week:
|Ticker||Addition/Deletion||Traded Value Potential||Conviction|
For a complete view of all of our predictions, sign up for ORTEX Advanced today. In the future, we plan to add additional support for other indexes such as the S&P 500, Russell 1000, Russell 2000, and more, so be sure to stay tuned as we continue to build out ORTEX Index Rebalance Predictions!