For indices in which the number of constituents is limited, such as the TA-35 index, a replacement criterion has been set, according to which shares are added or deleted from the index on the semi-annual index reconstitution index update dates. The ranking is conducted on the list of shares eligible for a given index, according to the replacement criterion.
Shares ranked higher than the entry threshold are included in the index, whereas shares ranked below the exit threshold are deleted from the index. The ranking is based on average market capitalization.
How is a replacement conducted?
In the case of the TA-35 index, for example, shares meeting the index's threshold criteria (i.e., included in the Rimon index universe, with at least 1 billion free float value) are ranked according to average market capitalization. All shares ranked in the top 30 are included in the index. All shares ranked 40 and below are excluded from the index.
Should more than 35 shares remain, additional shares, starting with the lowest ranked, are excluded. If less than 35 shares remain, additional shares, starting with the highest ranked, are included.
