Rebalancing, or rebalanced

Rebalancing refers to index going through a periodic adjustment of an index’s companies, called constituents or components. Rebalancing involves moving (higher or lower), or adding or removing constituent stocks within an index, such as the S&P 500. This keeps the index relevant and reliable. For example, if an index tracks the tech sector, a rebalance may remove companies that have shifted away from tech, or adding new tech firms. The S&P 500 is rebalanced quarterly, but it may be rebalanced mid-way through a quarter if companies have been impacted by mergers and acquisitions, bankruptcies, or delisting from an exchange, which affect a company’s value.