After the close of trading on Friday BlackRock Inc (NYSE:BLK). will replace Genzyme Corp (NASDAQ:GENZ). in the S&P 500 index (SNP:^GSPC). S&P is making the change because biotech company Genzyme announced last month that it would be taken private for $20.1 billion by France’s Sanofi-Aventis SA.
Barrons.com is quoting Citi’s William Katz as saying, “He’s estimating that inclusion in the S&P 500 will translate into roughly 10.5 million shares needed by index buyers against average daily trading volume of 840,000 shares over the the past three months.”
The addition of a company to a widely-followed index has historically given shares a boost, but this impact has been magnified significantly in recent years with the rise in popularity of passively-indexed ETFs that generally strive to track the movements of an underlying index within a few basis points.
Due to the addition and deletion of the two funds, ETFs like iShares S&P 500 Index (NYSE:IVV), Vanguard S&P 500 ETF (NYSE:VOO) and SPDR S&P 500 (NYSE:SPY) will now have to go out into the market and complete trades to achieve the requires find composition.