Indexology^® Blog

The S&P 500^®, commonly referred to as The 500™, underwent its latest quarterly update—commonly known as rebalances—at the end of last week. S&P 500 rebalances take place after the close of the third Friday of the quarter-ending month and can involve constituent changes (additions and deletions) as well as updates to company characteristics, such as changes to the number of shares outstanding to reflect the latest publicly available data.

Recently, many market participants were surprised to see, or rather not to see, any S&P 500 constituent changes coinciding with the June 2025 rebalance. A cursory glance at recent history suggests there is some justification for these reactions: each quarterly update between June 2022 and March 2025 coincided with announced additions and deletions for the S&P 500.

However, there is more than just historical precedent for a quarterly update without S&P 500 index additions and deletions—it has been a very common outcome! Around 90% of the nearly 800 S&P 500 constituent changes since 1995 did not take place on the third Friday of the quarter-ending month. Exhibit 1 shows that there were many years with zero constituent changes on these dates, demonstrating that S&P 500 rebalance turnover was typically driven by updates to company characteristics.

The timing of historical constituent changes reflects several important points. First, S&P 500 additions and deletions occur on an ongoing, as needed basis rather than on set reconstitution or rebalance dates. Second, around 70% of deletions since 1995 were caused by corporate events—such as mergers and acquisitions—that affected the index constituents’ eligibility. The index committee responsible for maintaining the S&P 500 has no control over the timing of these events, but any resulting index deletion necessitates a corresponding addition to maintain the index’s 500 company count.

Exhibit 2 further illustrates these points by comparing: a) the number of mergers and acquisitions (M&A) by S&P 500 companies (blue bars), and b) the proportion of S&P 500 constituent changes that took place between quarterly updates (orange line) since 2012. Given that M&A activity drove many constituent changes, it is perhaps unsurprising that years with higher (lower) M&A activity typically saw a greater (lower) proportion of changes take place between standard quarterly updates.

Additionally, it is important to recognize that index additions are not guaranteed when companies meet the eligibility criteria outlined in the S&P U.S. methodology document: the index committee is also mindful of sector balance and index turnover. Hence, existing constituents that may appear to violate one or more of the addition criteria are not automatically removed from the S&P 500, which helps to explain why we did not see elevated turnover in the S&P 500 in 2020. Indeed, Exhibit 3 shows that the one-way capitalization-weighted turnover for the S&P 500 in 2020 (4.17%) was in line with the long-term average since the early 1990s.

Although many market participants may have expected constituent changes at the June 2025 rebalance, relatively few constituent changes have taken place on the third Friday in March, June, September and December since 1995. This reflects the fact that the timing of many S&P 500 index changes was driven by corporate events, and that index changes are not guaranteed.

The author would like to thank Darius Nass for his contributions to this blog.

Global Champions in a Cross-Current Macro Landscape

In early 2025, global equity markets were marked by heightened volatility due to AI-driven earnings growth, monetary policy normalization and rising trade uncertainty. Despite these challenges and mixed market signals, the S&P Global 100, consisting of diversified multinational companies, showed resilience and seems to have effectively navigated the market YTD.

Index Composition and Methodology

The S&P Global 100 is a subset of the S&P Global 1200 and consists of 100 of the world’s leading publicly listed companies. Constituents are selected based on international revenue exposure, sector representation, liquidity and market capitalization. To qualify, companies must generate over 30% of their revenue and hold over 30% of their assets outside their home country, ensuring genuine global exposure. The index is weighted by float-adjusted market capitalization (FMC) and rebalanced quarterly in March, June, September and December.

Although the index has significant weight in U.S.-domiciled companies as a byproduct of its methodology, its real economic exposure is more nuanced.

The FMC-weighted foreign revenue share of the index is approximately 60%, with a mean of 67% among all constituents. On average, index constituents generate more than half of their revenue outside their economic region.^[1] Less than 15% of the index’s FMC is near the 30% threshold, and none of these constituents overlap in terms of GICS^® sector. As such, despite recent discussions on reshoring and global trade risks, significant turnover of the index appears unlikely.

Performance Review

Following a robust 27.28% rally in 2024—driven by Big Tech earnings and multiple expansion—2025 has seen increased volatility due to changing rates expectations, high valuations and trade uncertainty. As of May 31, 2025, the S&P Global 100 posted a YTD gain of 2.30%, reflecting noticeable return differences across sectors and regions. Financials led with a contribution of 1.73% on the back of the elevated interest rate environment, while Consumer Staples and Industrials added 0.90% and 0.67%, respectively. Conversely, Information Technology, Consumer Discretionary and Communication Services lagged, with declines of 0.84%, 0.40% and 0.30%, respectively, as investors shifted from growth-oriented sectors. Regionally, U.S. equities contributed to a 0.80% decline in the index performance, while Europe more than offset that loss with a 2.55% impact due to favorable policies and attractive valuations. Asia-Pacific also contributed with a 0.54% gain, amid trade disruptions and tariff issues.^[2]

Over the past decade, the index consistently outperformed broader global equity markets, demonstrating long-term resilience.

Concluding Insights

The S&P Global 100 continues to serve as a robust benchmark for tracking globally influential companies. Despite its focus on large float-adjusted market cap firms, the index’s thoughtful design helps mitigate sector concentration and enhances revenue diversification. These characteristics make it particularly well-suited for navigating today’s complex market environment, marked by macroeconomic uncertainty and shifting global dynamics.

^[1] Source: S&P Dow Jones Indices LLC, FactSet. Data for constituent names and weights as of May 31, 2025. Revenue data as of Dec. 31, 2024.

^[2] Source: S&P Dow Jones Indices LLC. Data as of May 31, 2025. Calculations are based on gross total return index levels in USD. Past performance is no guarantee of future results.

Review a resurgent S&P 500, check in on the performance of trend-following equities, dig into two factor indices—the S&P 500 High Beta Index and S&P 500 Low Volatility Index—that took a very different route to the same destination, make a detour for a look at the performance of select international equities and find out what VIX is telling us about the coming summer.

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How are indices using new risk-control techniques to help enhance stability and responsiveness to evolving market conditions? Look inside the S&P 500 Advantage Index and explore how this innovative tool observes intraday volatility and uses estimations of future market movements to dynamically adjust its weights between equity and cash to navigate potential market declines and recoveries while targeting a consistent volatility level. 

International equities have been gaining attention in 2025. As discussed in a previous blog post, international stocks have been outperforming U.S. stocks so far this year. The S&P ADR Index Series is one of the S&P Dow Jones Indices offerings that focuses on international markets through U.S.-listed securities.

American depositary receipts (ADRs) are securities that represent shares of non-U.S. companies that are held by a U.S. depositary bank and are listed on U.S. stock exchanges. They provide U.S. market participants access to foreign stocks, but incur fees different from those of their local listings. ADRs are suitable for direct indexing and could be of interest to those who don’t have easy access to foreign stock markets.¹

One might wonder if indices that measure these type of securities perform similarly to those that measure stocks listed on foreign exchanges. Compared to the S&P Global BMI Series, the S&P ADR Indices differ in their performance (see Exhibit 1). As not every international stock has an ADR, the number of constituents and the market capitalization of their indices has tended to be less, as illustrated by Exhibit 2. ADR indices have tended to include fewer small-cap companies, as evidenced by a higher mean and median float-adjusted market cap.

Additionally, due to the lower number of constituents, the S&P ADR Composite Index presented a higher concentration in its top 10 constituents than the S&P Global Ex-U.S. BMI. Notably, as shown by Exhibit 3, both indices share some companies as their top constituents.

Sector-wise, the weight in Information Technology stocks in the S&P ADR Composite Index was almost twice that of the S&P Global Ex-U.S. BMI (24.1% versus 12.3%) as of May 31, 2025, making the former more concetrated in growth stocks, which might tend to perform better in bull markets, but may underperform in lower growth macroeconomic environments. On the other hand, Exhibit 4 also shows that the S&P Global Ex-U.S. BMI had a higher weight in the Industrials sector.

Due to variations in their country classification, the country composition of these indices differs. For instance, the S&P ADR Composite Index had more weight in the U.K. and Taiwan, while the S&P Global Ex-U.S. BMI had a bigger proportion of Japanese companies.

However, despite the differences in their composition and performance, historically S&P ADR Indices have shown a high correlation with their foreign-listed equities index counterparts, particularly over the long term, as Exhibit 6 shows.

In conclusion, while S&P ADR Indices differ from international indices in composition, over the the long run they have compared closely in their performance and moved in a similar trend. Based on that, and after weighting the costs and benefits of ADRs, these indices can be used to gain insight into foreign equities.

¹ For further information about these securities, please see the investor bulletin published by the Securities and Exchange Commision.