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By Bloomberg

While Apple Inc.’s stock split removed one barrier to joining the Dow Jones Industrial Average, another obstacle exists: who would it replace?

The world’s biggest company by market value remains the most conspicuous omission from the 118-year-old Dow average, even after the split made its shares more palatable to a price- weighted gauge. Still, for Apple to enter, another must exit, and analysts see no obvious candidate for expulsion.

“It’s hard to look at one and say ‘What is that still doing there?’” said Richard Moroney of Horizon Investment Services in Hammond, Indiana. “It really is a list of blue-chip companies now. There’s no obvious leftover like you had in years past.”

Goldman Sachs Group Inc. credits Apple with driving more than a quarter of this year’s gains in the Standard & Poor’s 500 Index. If Apple had replaced even a top performer such as Cisco Systems Inc. in the Dow after the stock split, the gauge would have closed 163 points higher through this week’s record, according to Bloomberg calculations.

While Moroney said DuPont Co. could be a deletion as chemical companies make up a smaller part of the U.S. economy, it’s also one of the oldest members of the Dow. General Electric Co. was among the 12 companies that first formed the index in 1896. AT&T Inc. could be another option, but it’s also a long- standing member and telecommunications is still an important part of the nation’s economy, said Moroney, who is also an editor of the Dow Theory Forecasts newsletter.

Futures on the Dow expiring this month were little changed at 9:10 a.m. in London.

Price Weighting

Apple was long excluded from the Dow because at $700-plus a share it would have overwhelmed the index, which is weighted according to a share’s price rather than a company’s market value. A stock split on June 9 remedied that.

The Dow is unique in that its members are chosen by a committee instead of an objective, rules-based process. The committee last reshuffled the index in September 2013, swapping out the three lowest-priced shares -- Bank of America Corp., Hewlett-Packard Co. and Alcoa Inc. -- for higher-priced peers Goldman Sachs, Visa Inc. and Nike Inc.

Technology shares make up 9.5 percent of the Dow, about half their weighting in the S&P 500. There’s also a disparity in those shares’ performance. Apple has surged 105 percent in the last two years, while Google Inc. and Facebook Inc., both also missing from the Dow, have rallied 39 percent and 195 percent, respectively.

‘Reflect Markets’

David Blitzer, chairman of the index committee at S&P Dow Jones Indices, which owns the Dow, said the panel’s policy is never to comment on index adjustment with respect to a specific company. Opinions on whether a stock is likely to rise or fall aren’t part of the selection process.

“Our indices are designed to measure and reflect markets, not to achieve performance,” Blitzer said. “Adding or removing stocks in an index is not based on an investment opinion about a stock’s past or future price performance.”

Kristin Huguet, a spokeswoman for Apple, declined to comment on the Dow’s membership.

The 30-member Dow has been losing out on Apple’s soaring stock. As the measure falls further from investors’ favor, the committee may be running out of excuses, according to Robert Royle of Smith & Williamson Investment Management.

Royle points to exchange-traded funds tracking the Dow as a signal that the committee might soon change its mind. The biggest Dow ETF has seen outflows for three straight years, its longest-ever streak, according to data compiled by Bloomberg going back 15 years. A fund tracking the S&P 500 has meanwhile attracted money every year since 2011.

Past Tech

“Apple has generated so much of U.S. equity market returns,” said Royle, a fund manager at Smith & Williamson in London. His firm manages about $24 billion. “The tech companies they have in there currently are more representative of the past than the future.”

International Business Machines Corp. could be a candidate for removal, said Michael O’Higgins, chief investment officer at O’Higgins Asset Management. Added in 1932, IBM makes up the fourth-largest weighting in the index. But the company’s attempt to reinvent itself via endeavors such as cloud computing hasn’t been enough to win back investors. Its 18 percent slump from a high in April has dragged on the Dow.

“They’re a shrinking company,” said O’Higgins by phone from Miami. He coined the so-called “Dogs of the Dow” strategy. “The only way they’re keeping their earnings up at all are through buybacks.”

To take IBM out in order to swap an old tech company for a new one would be drastic, said Horizon Investment Services’ Moroney.

“The Dow’s missed out on a lot of gains since Apple’s had such a strong performance for several years,” said Paul Hickey, co-founder of the Harrison, New York-based research firm Bespoke Investment Group. “Apple’s the largest company, and the fact that it’s missing from the Dow raises eyebrows.”