US – Index provider Standard & Poor’s has dropped seven non-US companies from its S&P 500 index and replaced them with US companies, in a move that means the index is composed exclusively of US companies.

The dropped companies include Anglo-Dutch multinationals Unilever and Royal Dutch Shell and five Canadian companies – Nortel Networks, Alcan, Barrick Gold, Placer Dome and Inco.

Shares in the dumped stocks dropped on announcement of the news while those in the companies to be introduced to the index soared. S&P maintains the drop in value will be short lived.

“This change makes the S&P 500 a better reflection of the large cap segment of the US equities market,” said the head of S&P’s index committee David Blitzer. “Index funds and exchange traded funds can expect lower operating and transaction expenses and less tracking error.”

Unilever says it is disappointed and surprised by the move but claims the majority of its US equity, which accounts for 30% of its total, is held by fund managers that are not index trackers.