New York (CNN Business)Apple has been the most valuable stock in the world since 2012. But when FTSE Russell officially rebalances its key market indexes after the market close on Friday, there will be a new leader: Microsoft (MSFT).
Apple (AAPL) will fall to the third spot in the Russell 1000 index of large and mid-sized companies. Amazon (AMZN) will be in second place, while two other tech companies, Google owner Alphabet (GOOGL) and Facebook (FB), will round out the top five.Still, Apple’s demotion isn’t necessarily a bad sign for the iPhone maker. It reflects the broader rally in Big Tech.The landscape now is also markedly different from what it was in 2012, when Apple replaced Exxon Mobil (XOM), the former number one.”It’s just a reshuffling of the leadership,” Rolf Agather, managing director of North America research for FTSE Russell, told CNN Business.Read MoreThe top five stocks in the index are now worth nearly $4.2 trillion collectively. To put that into context, FTSE Russell said that the market value of all publicly traded US companies is about $31.7 trillion. So just five stocks account for more than 13% of that total.Apple's Jony Ive is leaving the companyThis is important since many mutual funds use the Russell 1000 (RUI) and the Russell 2000 (RUT), which looks at smaller US companies, as benchmarks for their own performance. So some managers will likely modify their portfolios based on the new weightings. Companies are added and removed from the indexes every year based on their market value. Some firms are also taken out because they have been acquired. And there are always new entries as a result of companies going public.The Russell 1000 will be adding some high profile initial public offerings of the past year, according to Catherine Yoshimoto, FTSE Russell’s director of product management. Uber (UBER) and Lyft (LYFT) are joining the Russell 1000, Yoshimoto said. So is Spotify (SPOT), which debuted on the New York Stock Exchange in 2018 through a direct listing of shares. Also making its debut? Wall Street’s current red-hot “it” stock Beyond Meat (BYND). Shares of the plant-based protein company are trading more than 550% above the $25 IPO price.This could make the index a little more volatile, given those stocks have tended to fluctuate a lot since they began trading. But the impact to the broader index will likely be minimized, since they make up just a handful of the 1,000 stocks that are part of the Russell 1000.Slack (WORK), which began trading directly on the New York Stock Exchange earlier this month, just missed the cut for inclusion. But FTSE Russell said it could add Slack in September, since it also does a quarterly review of newly public companies in addition to the index’s annual changes.