What is index rebalancing?
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Written by Lucy
Updated over a week ago

If you’re a customer on our Basic plan, you’ll have access to over 1,500 UK, US and European stocks and ETFs. However, you may notice a slight change every quarter to the list of stocks you are able to buy. This is due to index rebalancing.

What is index rebalancing?

As a reminder, a market index is a hypothetical group of investment instruments, representing a segment of the financial market. Examples include the FTSE100 or S&P500.

Each index has its own methodology for deciding what goes in it. Selection criteria could include market, asset class, sector or investment strategy. Index providers are responsible for making sure that the components of an index accurately reflect its stated methodology. This basically means they need to make sure the index still does what it set out to do. This is done through what’s called rebalancing.

Rebalancing is a regular, typically quarterly, review of the constituents within a market index.

This is what happens quarterly to the indices that Basic plan customers have access to. As a result of the rebalancing, some securities will move out, while others move in.

If you’re on our Basic plan and already hold a stock that is moving to our exclusive range as a result of index rebalancing, we will always inform you of the move at least 3 weeks in advance. Importantly, you will still be able to hold or sell the stock. You just won’t be able to buy any more of that particular stock without upgrading to our Standard or Plus plans, which give you access to our full range of 6,000+ stocks.

As a reminder, Basic plan customers get access to:

  • UK 350 (Large + Mid Cap)

  • Freetrade US 500

  • AIM 100

  • Europe 150 (Finland 25, Germany 40, Netherlands 25,Belgium 20, Portugal 20 and Austria 20)

  • Vanguard + iShares + Invesco ETFs

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