Parameters for updating TASE indices constituents' weights were published on March 23rd, 2017. The final milestone of the all new index methodology will become effective at the end of the trading session on April 6th. On the same date, the weight cap for all index constituents will be set as follows: TA-35 Index at 7%, TA-125 Index at 5% and TA Banks-5 Index at 33%. The monthly parameters update also allows Fast Track inclusion of new and "seasoned" shares. During the upcoming rebalance, two new shares will be added to the indices: Ratio Petroleum Energy and Medi Power.
Additionally, for the first time, a "seasoned" share - Carasso Motors, will be added to the indices under the "Fast Track" mechanism. A share addition to the indices was made possible thanks to the new methodology, under which "seasoned" shares that meets threshold criteria may be included in the indices, without waiting for next the semi-annual update.
The monthly parameter updates will serve market participants as a "trading window" which allows for proper adjustments for both index trackers and active investors.
One of the all new index methodology key objectives was to reduce market concentration in TASE indices and increase diversification, based on TASE's intention to reduce, as much as possible, the effect of the performance of a specific company on the indices and to present broader indices that more correctly reflect the Israeli economy.
Upon completion of the third and final milestone, at the end of trading on April 6th, 2017, the weight of the ten largest constituents of TA-35 Index will amount to approximately 58%, compared to approximately 71% in the original TA-25 Index. The accumulative weight of the ten largest constituents of TA-125 Index will be 43% as compared to the pre-reform weight of approximately 60% on TA-100. In addition, under the mentioned change in weight caps and the broadening of the indices, the weight of the largest constituents of other TASE indices was significantly decreased as follows:
Reduced concentration and broader diversification in the TASE indices Increased number of included companies in the TASE indices + reduced weight caps
Prior to Reform |
After Reform |
Weight of 10 largest companies in Index |
Weight of 10 largest companies in Index |
TA-25: 71% |
TA-35: 58% |
TA-100: 59% |
TA-125: 43% |
TA-Composite: 55% |
TA-AllShare: 5% |
TA-MidCap50: 36% |
TA-SME 60: 20% |
TA-75: 33% |
TA-90: 20% |
TA-MidCap: 24% |
TA-Growth: 20% |
