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Definition

This index consists of ordinary shares which comply with all listing requirements, but are too small to be included in the All Share Index and which are not tested for liquidity. The JSE is broken down into 4 indices – the JSE Top 40 (the 40 largest companies by free-float market capitalisation), the JSE Mid-Cap (the next 60 largest shares) and the JSE Small-Cap (which is the remaining shares in the JSE Overall after the Top 40 and the Mid-Cap). Shares which are supposed to be too small or not well enough traded to get into the JSE Overall index are in the “Fledgling” index. They are not measured for their free float – so there are plenty of really thinly traded shares in this index. In our database, we have 70 shares in the fledgling index. These vary from DRD which has a market capitalisation of R14bn to dozens of small companies like Conduit (CDN), Ellies (ELI) and Rex Trueform (RTO) which have market capitalisations of less than R100m. The most important aspect of these shares is that many of them are very thinly traded so as a private investor you need to pay special attention to their average volume traded. Make sure they have enough volume to allow you to stop out of the share if your need to. Most of the fledgling shares are included in the Alt-X, which is supposedly a market for small to medium companies in the growth phase and has far less stringent listing requirements. You can also look at and compare the JSE Alt-X index.

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