Selection
The components of the S&P 500 are selected by committee. This is similar to the Dow 30, but different from others such as the Russell 1000, which are strictly rules-based.
The index does include a handful (15 as of May 8, 2012) of non-U.S. companies. This group includes both formerly U.S. companies that have reincorporated outside the United States, as well as firms that have never been incorporated in the United States.
The committee selects the companies in the S&P 500 so they are representative of the industries in the United States economy. In addition, companies that do not have common stock that trades publicly (such as limited partnerships and companies that are privately or mutually held) and stocks that do not have sufficient liquidity are not in the index. By contrast, the Fortune 500 attempts to list the 500 largest public companies in the United States by gross revenue, regardless of whether their stocks trade or their liquidity, without adjustment for industry representation, and excluding companies incorporated outside the United States.
Read more about this topic: S&P 500
Famous quotes containing the word selection:
“The books for young people say a great deal about the selection of Friends; it is because they really have nothing to say about Friends. They mean associates and confidants merely.”
—Henry David Thoreau (1817–1862)
“When you consider the radiance, that it does not withhold
itself but pours its abundance without selection into every
nook and cranny”
—Archie Randolph Ammons (b. 1926)
“Historians will have to face the fact that natural selection determined the evolution of cultures in the same manner as it did that of species.”
—Konrad Lorenz (1903–1989)