What Nike told its team
Nike's investor relations group circulated a memo to executives, reviewed by Bloomberg News, to address discussion about the brand being taken out of the S&P 100. It supplied managers with facts and talking points, emphasizing that Nike "remains a member of the S&P 500" and that the index change has no impact on its operations, strategy, business, or public listing. The company declined to comment further.
The reweighting and who's in, who's out
Late last week, S&P Dow Jones Indices said that on Sept. 21 it will drop Nike, Honeywell Aerospace Inc., Simon Property Group, and Colgate-Palmolive Co. from the S&P 100. Joining the index in their place: Dell Technologies Inc., Palo Alto Networks Inc., Arista Networks Inc., and Sandisk Corp. The S&P 100 is updated quarterly, and Nike has been in it since the end of 2008. Rebalancings can trigger sizable trading by passive funds that track these benchmarks.
Why it's happening and the broader backdrop
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What it could mean for your money
Flows matter. The iShares S&P 100 ETF that follows this benchmark oversees about $20 billion and owns roughly $19 million worth of Nike shares. On the bigger stage, the Vanguard S&P 500 ETF has more than $1 trillion in assets and owns over $700 million of Nike, while a similar State Street fund has approximately $560 million, and the iShares Core S&P 500 ETF comes in at about $575 million. Translation: even with the S&P 100 change, the S&P 500 crowd still has a far larger say in how much Nike shows up in many portfolios.
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