Reddit will join the S&P 500 next week, giving the wide-ranging online forum a boost in prestige and investments.
Joining the S&P 500 is considered an achievement for a company because the index is a widely followed measure of the broader US stock market’s health. A company is selected for the index based on several criteria that demonstrate stability, including market size and consistent profitability.
Reddit’s stock surged 12.6 per cent Friday.
Aside from status, inclusion means more investments. The index tracks 500 of the biggest US stocks, and trillions of dollars in investments benchmark themselves against it. Those investments include mutual funds and exchange-traded funds. Essentially, those funds will have to buy the stock once it becomes part of the index that the fund is tracking or mimicking.
Investors are depending more than ever on funds that simply mimic indexes such as the S&P 500. It’s a lower-cost way to invest, allowing savers to keep more of their …
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