The index of Canada’s biggest stocks has welcomed a gold company and said goodbye to an energy player, but the changes that weren’t made are even more notable.
S&P Dow Jones Indices said it will add Kirkland Lake Gold Ltd. when it rebalances the S&P/TSX 60 on Sept. 23 and remove Husky Energy Inc. to do so. Kirkland Lake is up about 75 per cent this year, while Husky has declined by about one-third.
Often loosely described as a blue-chip index, the S&P/TSX 60 is not simply composed of the 60 best-performing stocks on the Toronto Stock Exchange, however, nor is it the five dozen most valuable companies. Instead, there are a handful of complex rules governing membership, and one of them, regarding sector balancing, suggested that the committee might have added Air Canada to the ranks – and delete either Bombardier Inc. or SNC-Lavalin Group Inc. to do so.
Hundreds of billions of dollars of Canadian mutual-fund and ETF money is tied to either the S&P/TSX Composite Index, which has 239 members, or the 60, which is selected from the Composite membership. But while more funds likely track the broader Composite, membership in the 60 can be seen as a proxy for becoming a Canadian blue-chip stock.
S&P does not generally comment on index changes, which are made by a committee that has a fair amount of discretion. The announcement on late Friday came earlier than expected and was not accompanied by any details on the upcoming quarterly rebalancing of the Composite itself, which also takes place Sept. 23. That announcement is expected by week’s end.