Burns and wound care developer Polynovo Ltd (ASX: PNV) and data analytics software provider Nuix Ltd (ASX: NXL) are among nine ASX shares that will be dropped from the benchmark S&P/ASX 200 Index (ASX: XJO) in the next rebalance.
S&P Dow Jones Indices has announced its next quarterly rebalance, effective 22 September.
Tech share Macquarie Technology Group Ltd (ASX: MAQ) will also depart, as will cancer biotech Clarity Pharmaceuticals Ltd (ASX: CU6).
You can find out which shares will enter the ASX 200 index on 22 September here.
What is an index rebalance?
Every three months, the S&P Dow Jones Indices team updates the composition of Australia's leading indices.
Rebalances ensure our indices accurately reflect the performance of the nation's largest companies by market capitalisation.
Indices provide a consistent way to measure the market's performance and monitor its momentum over any given period of time.
The ASX 200 is the benchmark index for the Australian share market.
What will happen to the stocks that drop out of the ASX 200?
Being part of the ASX 200 gives a company a bit of extra prestige.
Dropping out of the index indicates the company is not doing as well as before.
Leaving the ASX 200 can have tangible effects on a stock's price.
One reason is that many exchange-traded funds (ETFs) and managed funds are designed to track the ASX 200.
This means fund managers must adjust their holdings at each rebalance, selling ASX shares that are dropped and buying those added.
This often leads to extra trading activity around the rebalance date, which may influence a stock's price.
Rebalances have greater significance than ever before due to the rising popularity of ASX ETFs.
Betashares data shows Australians invested a record $5.28 billion into ASX ETFs in July alone.
The ASX ETF industry now has a record $289.2 billion in funds under management.
With so much money invested in ETFs, the rebalances can directly affect the passive investment support for individual stocks.
Aussies love ETFs because they're diversified investments that are purchasable in a single trade for one brokerage fee.
Most ETFs follow an index, which means they are very cheap to run, resulting in low ongoing management fees for investors.
9 ASX shares about to leave the ASX 200
Here are the stocks that will be exiting the ASX 200 in the next rebalance.
| ASX share | 6-month share price change |
| Amotiv Ltd (ASX: AOV) | (2.5%) |
| Credit Corp Group Ltd (ASX: CCP) | 11% |
| Clarity Pharmaceuticals Ltd (ASX: CU6) | 13% |
| Lifestyle Communities Ltd (ASX: LIC) | (30%) |
| Macquarie Technology Group Ltd (ASX: MAQ) | (13%) |
| Nufarm Ltd (ASX: NUF) | (41%) |
| Nuix Ltd (ASX: NXL) | (30%) |
| Polynovo Ltd (ASX: PNV) | 15% |
| Smartgroup Corporation Ltd (ASX: SIQ) | 13% |
The post 9 ASX shares including Nuix and PolyNovo dumped from ASX 200 appeared first on The Motley Fool Australia.
Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended PolyNovo. The Motley Fool Australia has positions in and has recommended Smartgroup. The Motley Fool Australia has recommended Nuix and PolyNovo. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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