Nasdaq 100 undergoes special rebalancing

The Nasdaq 100 index has experienced a sharp rebound in 2023 and is currently flying high. It has delivered more than 40 per cent returns as of date, rewarding its patient investors who endured 25 per cent decline last year. However, the recent upsurge in the top constituents (stocks) of the index has resulted in an increase in the index concentration, calling for a special rebalancing. What exactly is this special rebalancing, you might wonder? And what are the new stock weights and how does it impact you? In this article, we will break down all the details for you. Changes in stocks weights On July 7, 2023, Nasdaq announced its decision to conduct a special rebalancing of the Nasdaq 100 index. The move was triggered due to a sharp rally this year in its top constituents (stocks), called the 'Magnificent Seven', causing the concentration to exceed the tolerance band. Effective yesterday, i.e., July 24, 2023, new weights have been assigned to these stocks. Here is a summary of what has been pared down: Rejig in Nasdaq 100 Weights of top six constituents has been pared down in the special rebalancing Stock Previous weight (%)* New weight (%) Change (%) Microsoft 12.8 10.06 -2.74 🔻 Apple 12.45 9.79 -2.66 🔻