With the addition of Interactive Brokers ([IBKR]) to the S&P 500, we review what to expect for a stock when it is added to the index.

One of the goals of many established companies in the small and mid cap space is to eventually be added to the S&P 500 Index. There is a degree of pedigree in be included in the S&P 500 Index, but also potential financial gain as future flows into S&P 500 Index funds will help support the new addition’s stock price. That’s not a guarantee that newly added stocks will do well moving forward, but it is an added benefit especially if those new additions continue to do well. It’s been a relatively quiet year for additions into the S&P 500 with only six so far this year. However, on August 28th Interactive Brokers (IBKR) will be added to the S&P 500. IBKR has had a stellar year so far with a 43.22% year-to-date return and has been rated as a strong buy by NDW standards since May. While IBRK gave a sell signal recently, the long-term technical picture is sound.

With much anticipation following new additions to the S&P 500, their performance one week leading up to the event has been on average strong since 2020 at 2.44%. After getting added to the S&P 500, new additions struggle over the next month with an average return of 0.29% but it picks up as time goes on with an average one-year forward return of 19.22%. The end of the quarter is when most additions/deletions take place for the S&P 500, but we are still well below pace for additions in 2025 at seven including IBKR. The annual average since 2020 has been 19.8 excluding 2025. Nonetheless, being added to the S&P 500 is a big steppingstone for most companies but it does not guarantee success in the future. However, one-year forward returns for new additions this decade has been strong thus far.