Nike's investor relations group circulated a memo to executives, reviewed by Bloomberg News, to address discussion about the brand being taken out of the S&P 100. It supplied managers with facts and talking points, emphasizing that Nike "remains a member of the S&P 500" and that the index change has no impact on its operations, strategy, business, or public listing. The company declined to comment further.
Late last week, S&P Dow Jones Indices said that on Sept. 21 it will drop Nike, Honeywell Aerospace Inc., Simon Property Group, and Colgate-Palmolive Co. from the S&P 100. Joining the index in their place: Dell Technologies Inc., Palo Alto Networks Inc., Arista Networks Inc., and Sandisk Corp. The S&P 100 is updated quarterly, and Nike has been in it since the end of 2008. Rebalancings can trigger sizable trading by passive funds that track these benchmarks.
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Flows matter. The iShares S&P 100 ETF that follows this benchmark oversees about $20 billion and owns roughly $19 million worth of Nike shares. On the bigger stage, the Vanguard S&P 500 ETF has more than $1 trillion in assets and owns over $700 million of Nike, while a similar State Street fund has approximately $560 million, and the iShares Core S&P 500 ETF comes in at about $575 million. Translation: even with the S&P 100 change, the S&P 500 crowd still has a far larger say in how much Nike shows up in many portfolios.
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