NEW YORK – Some of the high-flying tech stocks of the dot-com boom of the late '90s will get booted from the Nasdaq 100 index in a Christmas Eve rebalancing of the gauge that tracks performance of 100 largest growth stocks listed on the Nasdaq Stock Market.
At the same time, some obscure health-care stocks will be added to the index on Dec. 24 as they have grown quickly over the past year.
Some $6 billion worth of shares will need to be traded by indexers to replicate the changes in the index, said John L. Jacobs, president and chief executive officer of Nasdaq Financial Products Services Inc., a subsidiary of Nasdaq.
All 13 names, released by the Nasdaq Stock Market on Monday, to leave the index are technology stocks including Novell Inc., Inktomi Corp., Ariba and CNET Networks.
Of the 13 stocks to be added to the index, eight are health-care, including ImClone Systems , Sepracor Inc., Invitrogen Corp. and Cephalon Inc.
The Nasdaq 100 -- which has some $30 billion indexed to its performance, according to Jacobs -- has lost much of its popularity among investors as the tech bubble burst last year, said money managers.
``The Nasdaq 100 now is just like the Dow Jones industrial average -- it doesn't matter any more,'' said Dan Rivera, head of equities at American Express Financial Advisors which has $234 billion in assets under management. ``It used to be sexy when people over-invested in tech. But those days are behind it now. It has lost the relevance.''
The Nasdaq 100 has lost 31.4 percent in 2001, much worse than the Nasdaq Composite index, which fell 20.9 percent, and the Standard & Poor's 500, which is down 14.9 percent.
The Nasdaq 100 Trust, or the tracking stock for that index with some $22.6 billion in assets, although it did better than the index itself, has lost 4 percent this year. The QQQ, which was launched in March 1999 with $15 million in assets, is now the second largest U.S. exchange-traded fund in size, the Nasdaq said.
The new index looks slightly less expensive because it eliminated some of the high-flying tech names and added more health care, said Steven DeSanctis, an equity strategist at Prudential Securities.
Technology, which grew to 94 percent in index weighting a year ago from 54 percent in 1990, will continue to represent the bulk of the highly volatile index with a weighting of about 92 percent, according to Nasdaq's Jacobs.
Hardware and biotech names in the index will increase this year while telecoms are down, he added.
The composition of the index is determined by the Nasdaq Stock Market, based in New York. For a stock to be selected it must rank among the top 150 stocks on the Nasdaq stock market by market value, have an average daily trading volume of at least 100,000 shares and not be in the financial sector, among other conditions.
The Nasdaq 100 index was first published in January 1985. The Nasdaq re-ranks the index every year based on the number of shares outstanding and stock price.
Stocks that move in and out of the index may experience some strong buying and selling pressure leading up to the rebalancing on Dec. 24, said Prudential's DeSanctis.