Standard and Poor’s 500 (S&P 500)


    The Standard & Poor’s 500 (S&P 500) is a weighted index of the 500 largest American companies listed in the NYSE and the NASDAQ. It is the most traded index in the US after the Dow Jones industrial average. Trading prices are calculated and published in real time (every 15 seconds).

    First published in 1957, the S&P 500 is considered to provide a clear picture of the US economy. The index is owned and maintained by Standard & Poor’s. The 500 leading companies listed on the S&P 500 cover 75% of all US equities.

    The composition of the S&P 500 is put together by a committee. It is understood that the included companies have to be traded publicly and the stocks have to be sufficiently liquid.

    To illustrate, Berkshire Hathaway has an extremely high market capitalisation, but because of the very high stock price of over $100,000 for an A share, it is actually traded very rarely and therefore lacks the required liquidity. The committee removed the A share from the index and ultimately put in the lower priced B share.