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I read today about the rebalancing of ASX 50/200/300 coming into play next week (20/09). Some stocks drop out some come in. Question then. Apart from ETFs and investment vehicles which perhaps have to buy and sell, does it matter to retail holders, or the stock itself? Does membership of the “200” vs. the “300” impart some extra fairy dust?
A: The quarterly rebalancing of the indices can have an impact on stocks – either by creating short term demand or short term supply. Clearly, the major index ETFs and other index funds (which typically track the ASX/S&P 200) may have to buy or sell. The impact tends to be more significant when the entry or exit is unexpected.
Some active fund mangers also have to take action because their mandates don’t allow for stocks outside (say) the ASX 200 or ASX 100. Again, it is a case by case proposition – and the more unexpected the entry or exit, the more the impact.
September’s rebalance takes effect on September 20. It was announced (after market close) on Friday 3 September. The changes to the S&P/ASX 200 are: lifestyle Communities, Pinnacle, Sealink and Tyro coming in; out goes G8 Education, NRW Holdings, Nuix and Westgold Resources.
