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Does Your US Index Fund Include the Largest Gambling Stock? Don’t Bet on It. . .

Flutter, the world’s leading online sports betting and iGaming company, operates well-known global brands such as FanDuel, PokerStars, Paddy Power and Betfair. Flutter’s stock is listed on the New York and London Stock Exchanges and has a market capitalization of ~$45 billion, ranking it well within the top 350 most valuable companies in the world.

 

Despite its size and prominence, Flutter’s stock has yet to be added to some flagship U.S. indexes.

 

Earlier this year, Flutter officially moved its headquarters to the U.S. from the UK and shortly thereafter changed its primary stock listing from the LSE to the NYSE. Once that happened, MSCI replaced Flutter’s UK listing with its U.S. listing, and Flutter’s stock was purchased by index funds tracking the MSCI USA index, effective at the August 2024 Index Review.

 

Russell indexes, on the other hand, have yet to include Flutter’s stock. Because this listing change occurred in May, it was too late to be included in the 2024 Russell Reconstitution. Unless there is another material change, Flutter’s stock will very likely be included in the 2025 Reconstitution — over a year after its shift in primary listing.

 

Flutter is also absent from the S&P 500, but for a different reason. Despite its industry prominence, Flutter hasn’t posted four consecutive quarters of positive earnings and therefore does not pass S&P’s financial viability screen.

 

Knowledge of the methodology of the underlying index is vital to understanding what exposures your index fund is providing.  Not all indexes are the same, and understanding how they are constructed can make a big difference in the investments you choose.  Whether you’re investing in global companies like Flutter or tracking broader markets, it’s important to know what you’re getting. If you have questions or want help creating an investment strategy that fits your needs, we’re here to help.

 

The MIS team at Westwood Group believes that indexes are all not created equal and index selection and design is an active decision. If you would like to discuss the nuances of indexing and explore designing a custom index that helps solve for your unique goals and outcomes, please reach out, we’d love to help provide a solution.

The information contained herein represents the views of Westwood Management at a specific point in time and is based on information believed to be reliable. No representation or warranty is made concerning the accuracy or completeness of any data compiled herein. Any statements non-factual in nature constitute only current opinion, which is subject to change. Any statements concerning financial market trends are based on current market conditions, which will fluctuate. Past performance is not indicative of future results. All information provided herein is for informational purposes only and is not intended to be, and should not be interpreted as, an offer, solicitation, or recommendation to buy or sell or otherwise invest in any of the securities/sectors/countries that may be mentioned.