Will Jio Financial’s entry into MSCI, FTSE elite group change anything for index fund trackers?
Jio Financial Services will eventually see its exit from domestic benchmarks Nifty 50 and Sensex, the stock will remain among the elite group of MSCI and FTSE indices.
FTSE Russell added Jio Financial back to the All-World cap index and a few others, while MSCI Inc will add the stock to its Global Standard and Largecap indices after market trading hours on Wednesday.
Typically an inclusion or exclusion of a stock from MSCI/FTSE indices results in inflows or outflows as passive funds adjust their portfolio to the changes.
However, the stock’s presence in global indices is unlikely to result in any inflows or outflows, according to experts.
“Unlike in India, where there are a set of criterias to be part of Nifty/Sensex, the breadth of global indices is wider. Therefore, Jio Financial will be in FTSE and MSCI indices,” says Abhilash Pagaria of Nuvama Institutional Equities.
As funds owning RIL stock already have Jio Financial shares, there will be no fresh adjustments in their portfolio.
