NASDAQ Special Re-Balancing 2023

Nasdaq has announced the details of its special rebalancing of the Nasdaq-100 Index, which will take place before the market open on Monday, July 24. The rebalancing is being conducted to address over-concentration in the index by redistributing the weights of the largest stocks. The 5 largest stocks that account for 48.72% of the index are MSFT, APPL, NVDA, AMZN, and TSLA.

The following are the changes that will be made to each of these holdings in the Nasdaq-100 Index:

  • Microsoft: The weight of Microsoft will be reduced from 12.91% to 11.94%.
  • Apple: The weight of Apple will be reduced from 12.47% to 11.5%.
  • Nvidia: The weight of Nvidia will be reduced from 7.04% to 6.17%.
  • Amazon: The weight of Amazon will be reduced from 6.89% to 6.02%.
  • Tesla: The weight of Tesla will be reduced from 4.50% to 3.63%.

These changes will result in the aggregate weight of the largest five stocks in the Nasdaq-100 Index being reduced from 48.72% to 44.27%. This will bring the index more in line with the Nasdaq-100 Index's methodology, which limits the aggregate weight of the largest five stocks to 50%.

The special rebalancing is expected to have a modest impact on the prices of the affected stocks. However, it is possible that some investors will sell shares of these stocks in anticipation of the rebalancing, which could lead to a decline in their prices to name one potential point of volatility. 

Overall, the special rebalancing of the Nasdaq-100 Index will be a positive development for the index, as it will make it more diversified and less susceptible to the performance of a few large stocks. With such a large run up of the largest of the large caps in the index we expect that the smaller weights in the index will out perform. 

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