Business, Legal & Accounting Glossary
The S&P 400 Index is an equity index representing 400 mid-sized companies in various industries. The S&P 400 Index is also called the S&P MidCap 400 Index. The S&P 400 Index was launched in 1991. The S&P 400 Index is a benchmark for valuing companies too small to be included in the S&P 500 Index but too large to be included in the small-cap S&P 600 Index. The S&P 400 Index represents over 7% of the entire U.S. equity market. The S&P 400 Index is weighted by market capitalization. The S&P 400 Index includes mid-cap stocks with market capitalizations ranging from about US$1.5 billion dollars to about US$5.5 billion. To be included in the S&P 400 Index, a company must be a US company with strong financials (i.e. as reported earnings must be positive for 4 quarters in a row). An S&P 400 Index company must have good liquidity. An S&P 400 Index company must also be an operating type of company (i.e. no holding companies for example but REITs are allowed). The S&P 400 index is calculated by Standard and Poor’s in accordance with published specifications. The S&P 400 Index is reconstituted on an as-needed basis by S&P economists, index experts, and members of the S&P Index Committee. In 2005, Standard and Poor’s developed sub-indices to the S&P 400 Index. The S&P 400 sub-indices are part of the SP/Citigroup Style index series. The S&P 400 sub-indices are listed as SP Composite 400/Citigroup growth and value indices and S&P Composite 400/Citigroup pure growth and pure value indices. Various Exchange-traded Funds (ETF), futures, options, and mutual funds offer investment vehicles to trade the S&P 400 Index.
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This glossary post was last updated: 5th February, 2020