Precision instrument maker Ralliant to be officially spun off, join S&P 600 next week

Precision instrument maker Ralliant will join the S&P SmallCap 600 starting Tuesday, July 1. This will take place a day after Fortive, an industrial technology conglomerate, spins off Ralliant. Freedom Capital Markets Research thinks index inclusion will bring passive capital inflows to the stock and give a boost to the share price. 

Ralliant will join the S&P SmallCap 600 on Tuesday, according to an announcement by S&P Global. It will replace bankrupt semiconductor manufacturer Wolfspeed. 

Ralliant is not listed on the exchange yet. Trading will start only on Monday, when a transaction to spin off Ralliant from Fortive is expected to close.

Fortive, a constituent of the S&P 500, announced plans to split into two independent public companies back in September. After the reorganization, it will retain technology solutions currently operating under Fortive’s Intelligent Operating Solutions and Advanced Healthcare Solutions business segments and be «focused on resilient, high-quality recurring growth.» The new company, called Ralliant, will specialize in precision technologies, including for space and defense. 

Investors took the news of the separation with cautious optimism: On September 5, the day after the spin-off was announced, Fortive quotes rose 1.5%.

The addition of Ralliant to the S&P SmallCap 600 should result in passive capital inflows and share price growth, believes Freedom Capital Markets Research. When the composition of an index changes, all index-tracking funds need to buy and sell the same stocks in the same quantities. This increases demand for the stocks and boosts trading volume, notes Freedom Finance Global analyst Georgy Timoshin. He cites other benefits as well: Index inclusion draws more attention from Wall Street analysts and the media, which can further fuel interest from retail investors beyond passive investing, and many investors view index inclusion as a sign of quality.

Nasdaq, back in 2021, found that close volumes were typically six times larger on index rebalance days. It estimated 40% of the market-on-close flow was likely due to index funds, versus around 5% of the smaller close auctions on normal days.

The AI translation of this story was reviewed by a human editor.