Wednesday, June 16, 2021 11:55:56 AM
The actual index funds can't buy the new stocks in the index until the actual date of the change. Used to be that would spike those stocks on that date.
The index fund managers did not like that as it compromised their returns. Now what happens is that OTHER funds or private equity groups figure out which stocks will be added, buy them in advance, and sell at a negotiated price to the index funds on Russell reconstitution day. All is negotiated in advance - something like WXYZ will join the index on June 30. Private equity fund has deal with index fund manager under which the equity firm will buy WXYZ sometime before 6/30 and agree to sell it to the index fund on 6/30 splitting the difference between what they paid and the closing price on 6/30. Works for both parties - index fund manager gets his position without spiking the stock, private equity guy gets a risk free profit on a 10 to 20 day hold.
If I could afford to buy all of them, I would not need to buy any of them and I sure wouldn't be spending time on the message boards!
Recent IDEX News
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- DenizBank launches biometric payment cards in Turkey based on IDEX Pay • GlobeNewswire Inc. • 03/18/2024 10:30:00 AM
- Turkish bank launches biometric payment cards based on IDEX Pay • GlobeNewswire Inc. • 03/18/2024 08:01:45 AM
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- Form 8-K - Current report • Edgar (US Regulatory) • 03/08/2024 10:13:57 PM
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- Form 8-K - Current report • Edgar (US Regulatory) • 02/29/2024 10:00:20 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 02/23/2024 10:07:27 PM
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- KONA I to introduce biometric smart cards with IDEX Biometrics in Japan • GlobeNewswire Inc. • 02/08/2024 09:59:11 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 01/31/2024 01:12:21 PM
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- Form 8-K - Current report • Edgar (US Regulatory) • 01/18/2024 12:30:06 PM
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- Form 8-K - Current report • Edgar (US Regulatory) • 01/16/2024 12:50:00 PM
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