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Carnarvon Petroleum into S&P/ASX 300 – AC8, BGL, PAR into All Ordinaries

The rebalance changes are effective at the open of trading on March 18, 2019.
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Some fund managers can only buy stocks once they reach a certain size and enter certain indices

Carnarvon Petroleum Ltd (ASX:CVN) has featured twice in the quarterly S&P Dow Jones Indices rebalance, entering the All Ordinaries (INDEXASX:XAO) and the S&P/ASX 300 (INDEXASX:XKO).

The company’s recent oil and gas discovery means that it is 1 of 10 companies added to the ASX 300 index.

WATCH: Carnarvon Petroleum advancing Dorado and Buffalo projects

Meanwhile, Auscann Group Holdings Ltd (ASX:AC8), Bellevue Gold Ltd (ASX:BGL), and Paradigm Biopharmaceuticals Ltd (ASX:PAR) have all been added to the All Ordinaries Index.

Additional to indices can be a catalyst for stocks

The addition to an index can create liquidity for stocks.

This is because certain larger institutional investors have rules for which stocks they can and can’t own in their portfolios.

An Australian fund manager, for example, might only be able to buy stocks that are big enough to be in the All Ordinaries or ASX 300.

There are also ETFs that track or mimick various indices, take the Vanguard Australian Shares Index ETF (ASX:VAS) for example, it seeks to track the return of the S&P/ASX 300 Index.

Because it seeks to track the ASX 300, this means it will now have to buy shares in Carnarvon because it is set to become a member of the ASX 300.

READ: AusCann Group appoints Teva Pharmaceutical executive as new CEO

READ: Bellevue Gold substantial holder Bank of Novia Scotia increases stake to 12.27%

READ: Paradigm Biopharmaceuticals moving towards phase 2/3 MPS clinical trial

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