(Reuters) - General Electric Co’s (GE.N) expulsion from the elite Dow Jones Industrial Average may be a bitter pill to swallow for shareholders, but it could be little more than a publicity blow for investors in the 126-year-old struggling U.S. conglomerate.
While the Dow index of 30 top-shelf U.S. corporations is arguably more well known, professional investors bet much more money on what happens to the S&P 500, an index in which the one-time leading U.S. company has only a tiny influence. GE’s drop from the Dow will thus likely not pose a risk of wide selling pressure by indexed investment funds.
“There’s only a small group of investors who actually target their investing to the Dow Jones Industrial Average,” said Rick Meckler, a partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey. “All in all, I don’t think it’s meaningful to investors.”
Indeed, investors in GE might look on the move as the least of their worries. Struggling with weak profits and facing calls to be broken up, GE shares have already dropped 15 percent this year.
GE reached its peak share price in late August 2000, about a year before longtime Chief Executive Jack Welch turned over the reins to Jeffrey Immelt. The stock has fallen more than 75 percent since.
Not even its rich dividend has cushioned the dismal performance: Including reinvested dividends, GE
