TASE SME60 Index

The **TASE SME60 Index** is an Israeli equity index calculated by the Tel Aviv Stock Exchange (TASE). It tracks 60 shares with the highest free-float market capitalization among eligible TASE-listed shares that are not included in the large- and mid-cap TA-125 Index, making it a benchmark for the next tier of Israeli listed companies.^[1]

Overview

The TASE SME60 Index, also written as **TA-SME60**, is part of TASE’s market-capitalization index family. TASE classifies the index under its “Market Cap. Indices” category and publishes it with index code **147**.^[2] The index is intended to represent a defined segment of the Israeli equity market: companies that are significant enough to meet TASE index criteria but that sit below the TA-125 universe, which itself comprises the TA-35 and TA-90 indices.^[1]

The index should not be confused with a fund, exchange-traded fund, or portfolio. It is a calculated benchmark: a numerical measure of the changing value of a selected group of shares. TASE’s annual report describes a securities index as a number expressing changes over time in the value of a group of securities, with those changes reflecting the return on the securities included in the index according to their weights.^[1]

The SME60 therefore functions as a reference point for smaller and medium-sized public companies in Israel. In local market practice, it is often discussed alongside the TA-35 Index, the TA-90 Index, the TA-125 Index, and broader TASE equity benchmarks. The TA-35 and TA-90 cover the larger companies that form the TA-125; the SME60 extends coverage to 60 additional shares that meet TASE’s criteria but are not in that larger-cap benchmark.^[1]

Index provider and market context

The index is maintained by TASE, Israel’s central securities exchange and the operator of the principal regulated market for shares, government bonds, corporate bonds, exchange-traded products, and derivatives in Israel. TASE is also the publisher of the local equity index family that includes the TA-35, TA-90, TA-125, TA-SME60, sector indices, and thematic indices.^[2]

Within Israel’s equity market structure, the SME60 is positioned below the TA-125. TASE’s 2022 periodic report described the TA-35 as an index of the 35 companies with the highest market capitalization on the exchange that meet index criteria, the TA-90 as the 90 highest-market-cap companies not included in the TA-35, and the TA-125 as the combination of those two indices.^[1] In the same table, TASE defined the TA-SME60 as the 60 shares with the highest free-float market capitalization on the exchange, from outside the TA-125, that meet the relevant criteria.^[1]

This structure creates a tiered equity-index framework. The TA-35 represents the largest eligible companies. The TA-90 captures the next group of 90 companies. The TA-125 combines the two. The SME60 then represents the next eligible group after the TA-125, giving the market a more focused measure of smaller listed companies than the principal large- and mid-cap benchmarks.

Constituents and eligibility

The core constituent count is 60 shares. TASE’s index-composition page for TA-SME60 states “Total 60 Records,” and its market data pages identify the index as “TA-SME60” under index code 147.^[3] TASE’s annual-report definition specifies that these are selected from eligible shares outside the TA-125 by free-float market capitalization.^[1]

“Free-float market capitalization” is important because it differs from total market capitalization. In a free-float approach, the index calculation emphasizes shares available to public investors rather than all outstanding shares, including strategic or tightly held stakes. TASE’s index-reform materials note that the exchange uses free-float parameters in the share-weight equation and has updated its methodology to incorporate liquidity as a component in determining index weights.^[4]

TASE’s published reform presentation also described the **Rimon Universe**, a key eligibility universe for TASE equity indices. The Rimon criteria referred to liquidity tests based on being among the 300 shares with the highest median daily trading volume or among the 300 shares with the highest median trading velocity, as well as market-cap criteria based on ranking among the 300 highest average-market-cap shares expected to be included in the broader Tamar universe.^[4] For flagship indices, the same presentation listed a minimum free-float rate of 20% for TA-SME60 and TA-90, while TA-35 retained a 30% minimum free-float rate, with a special 20% rule for IPOs in their first two years.^[4]

These rules mean that the SME60 is not simply a list of the 60 smallest or newest companies on TASE. It is a rules-based index drawn from companies that pass marketability, float, and other index requirements. Companies may become eligible or ineligible as their market capitalization, free float, trading liquidity, corporate actions, or relative ranking change.

Weighting and calculation

The TASE SME60 Index is a market-capitalization index, but the relevant capitalization is adjusted for free float and other index parameters rather than based solely on total shares outstanding. TASE’s index-reform presentation summarized the share-weight equation as including the adjusted number of shares, free-float rate, liquidity bracket, weight-cap factor, and price.^[4]

This weighting design has two effects. First, larger free-float companies within the SME60 generally have greater influence on index movements than smaller free-float companies, all else equal. Second, liquidity and index-specific constraints may affect each constituent’s final index weight. This distinguishes the index from equal-weight variants, where every constituent receives the same or similar starting weight.

TASE also publishes related SME60-based indices, including the **TA-SME60 EW PM** index, which TASE describes separately as an equal-weight profitability-model version containing shares included in the TA-SME60 and in TASE’s profitable companies list.^[5] The existence of this related index underscores that the standard TA-SME60 is the main market-cap version, while alternative versions can apply different weighting or quality screens.

TASE states in its online market-data tables that indices such as TA-SME60 are updated during the trading day; its index pages provide last value, percentage change, turnover, market capitalization, components, historical data, and tracking-product information.^[2][3] The exact live value changes with trading prices, corporate actions, constituent adjustments, and broader market movements.

Rebalancing and methodology changes

TASE equity indices are maintained under formal index rules and periodic review processes. TASE’s index-reform presentation described a transition from monthly to quarterly updates for many indices, changing the update frequency from 12 updates per year to four.^[4] It also described changes to threshold criteria for the Rimon Universe, the addition of liquidity components, and the cancellation of the free-float brackets method in favor of a more exact free-float-rate parameter rounded to a whole percent and reset at quarterly rebalance dates.^[4]

For the SME60 specifically, TASE’s reform materials listed the new or eased flagship-index criterion of a minimum 20% free-float rate.^[4] The same document stated that liquidity brackets are calculated using six months of data and that, on each rebalancing date, the liquidity ratio for each share is determined for calculating its weight until the next rebalance.^[4]

Rebalancing matters because the SME60 is not static. A company may move from the SME60 into the TA-125 if its size and eligibility ranking rise sufficiently, or it may leave the SME60 if its market value, free float, liquidity, or other criteria deteriorate. Conversely, companies below the SME60 can enter the index if they rise in ranking and satisfy the required conditions. Corporate actions such as mergers, spin-offs, delistings, dual listings, and changes in public float can also affect index membership or weights.

Relationship with the TA-125 and other TASE indices

The SME60 is defined by exclusion from the TA-125. TASE’s 2022 report states that TA-SME60 includes 60 shares with the highest free-float market capitalization out of the shares not included in the TA-125 Index.^[1] This makes the TA-125 boundary the key dividing line between the larger-company universe and the SME60 universe.

The TA-125 itself combines the TA-35 and TA-90. In practice, the SME60 therefore provides exposure to companies ranked below the 125 largest eligible TASE shares, subject to TASE’s methodology. It is narrower than a broad all-share index but broader than a sector index, since it is not designed to isolate one industry. It is also different from the TA-Growth or other “rest of market” indices, which may include a wider or differently defined set of shares outside the main benchmarks.

The SME60 may overlap with some thematic or sector indices, depending on the composition at a given time. For example, an SME60 constituent that belongs to a technology, real-estate, financial-services, industrial, retail, or energy sector may also appear in a relevant TASE sector index if it satisfies that index’s criteria. This overlapping index architecture allows market participants to view the same company through different lenses: by size tier, sector, liquidity, dividend behavior, profitability model, or other classification.

Use as a benchmark

The TA-SME60 can be used as a benchmark for Israeli smaller-cap equity performance. Asset managers, analysts, issuers, and market observers may compare portfolios or company performance with the index when the relevant investment universe is below the TA-125 but still within the more liquid portion of the TASE equity market.

TASE publishes a page for TA-SME60 tracking exchange-traded funds, indicating that the index can serve as an underlying benchmark for passive investment products listed on the exchange.^[6] Such products are separate legal and financial instruments from the index itself. The index is calculated by TASE; a tracking product attempts to replicate or follow its performance according to the product’s prospectus and applicable regulation.

Because the index covers smaller companies than the TA-125, its behavior can differ materially from the large-cap Israeli market. Smaller-cap shares may show different sector exposures, trading liquidity, volatility, ownership structures, and sensitivity to domestic economic conditions. The SME60 can therefore move differently from the TA-35 or TA-125, even on the same trading day.

Performance and market statistics

Historical performance varies significantly by period. In TASE’s 2022 periodic report, the TA-SME60 showed a decline of 33.2% for 2022 and a gain of 29.7% for 2021; the same table reported the index’s market capitalization as NIS 42 billion at the end of 2022 and NIS 67 billion at the end of 2021.^[1] These figures illustrate the index’s sensitivity to market cycles and to changes in the valuation of smaller listed companies.

In TASE’s 2024 annual review, the TA-SME60 was reported as rising 42.1% in 2024 after rising 7.0% in 2023.^[7] The same review presented a five-year cumulative yield of 52.3% for the TA-SME60, alongside figures for other TASE indices such as the TA-35, TA-125, TA-Banks5, and sector benchmarks.^[7]

TASE’s online index page also provides point-in-time data such as last index level, daily percentage change, turnover, market capitalization, and constituent list.^[3] These online figures are time-sensitive and should be read as market data rather than permanent reference values. Financepedia entries describe the index’s structure and role; for current index levels or current constituents, TASE’s live or recent market-data pages are the primary reference.

Economic interpretation

The SME60 is often interpreted as a gauge of Israeli smaller-company equity performance, but it is not a complete measure of all Israeli small businesses or all small public companies. Its eligibility screens mean that it represents a more tradable subset of public companies rather than the entire universe of privately held small and medium-sized enterprises.

The index’s name can therefore be misleading if read literally. “SME” in this index context refers to the market segment below the TA-125 within TASE’s index framework, not to the full economic category of small and medium enterprises used in banking, taxation, or industrial policy. Many private Israeli SMEs are not listed on TASE and are not represented in the index at all.

The index can nevertheless be useful for observing domestic equity-market breadth. When the SME60 outperforms larger-cap indices, it may suggest stronger investor appetite for second-tier or smaller public companies. When it underperforms, it may suggest caution toward less liquid or smaller-cap shares. Such interpretations require context, including sector composition, interest-rate conditions, geopolitical risk, currency movements, earnings trends, and liquidity conditions.

Risks and limitations as a benchmark

The SME60 has several benchmark limitations. First, it is narrower than broad-market indices because it includes only 60 shares. Second, it excludes TA-125 constituents, so it omits many of Israel’s largest and most internationally visible listed companies. Third, smaller-cap equities may trade with lower liquidity than the largest shares, which can affect transaction costs and the ease of replication by funds or institutional portfolios.

Fourth, index performance may be influenced by methodology details such as free-float adjustments, liquidity brackets, and weight caps. These features are intended to make the benchmark more investable, but they also mean that the index does not simply mirror total market value. TASE’s reform materials explicitly identify liquidity as a parameter in the index weight equation, reflecting the exchange’s effort to account for practical tradability.^[4]

Finally, the index is not a recommendation and does not indicate whether any constituent security or tracking product is suitable for a particular investor. It is a market measure maintained by TASE under its rules. Investors and analysts using the SME60 typically consider it together with issuer disclosures, fund documents, trading data, economic indicators, and regulatory information from bodies such as the Israel Securities Authority.