The reason for the price jumps is easy to discern. It’s not simply the prestige of being placed on a list of 500 iconic companies. Rather, it is because a large number of ETFs and institutional investors automatically add new entrants to their portfolios shortly after the chosen companies are announced, scooping up millions and millions of shares in the process. The more interesting question is instead how S&P Dow Jones compiles the list in the first place.
If anyone is in a position to answer questions about the process, it is Howard Silverblatt. The senior index analyst has worked at S&P Dow Jones for 49 years, and has seen successive waves of companies and sectors arrive and exit from the list. That has included a growing number of tech and IT firms taking their place, pushing off the likes of print publishers and old-line industrial companies in the process. The following graphic, made using Perplexity and based on public data, shows some of the notable changes to the list over the past decade:
So who exactly sits on that committee? That’s a closely held secret. According to Silverblatt, who won’t say if he was among those who presided over the latest shuffle, S&P Dow Jones doesn’t reveal the names of committee members in order to shield them from lobbying. This system, which also forbids committee members from having a personal stake in any of the companies at issue, appears to be working, as there seem to be no obvious instances of a company buying its way onto the list.
When it comes to the committee choosing companies, he says the body has more heterogeneous backgrounds than when he joined in 1977, when it consisted of a “group of guys from the same business school drinking Scotch.”
Today, Silverblatt says, “in assembling a portfolio, we need different types of people. It can’t be just quants or just fundamentalists.”
