It’s a little more complex than that.
the funds don’t buy (or sell) ahead of time.
that is effectively outsourced to investment banks and brokers.
they effectively front run the rebalancing (could be buying or selling) and offer to cross it up with the passive funds at rebalance date. funds take no rebalancing risk.
plenty of ways for it to go pear shaped but it’s a well worn path and shouldn’t over time affect volatility.
new index entry is a bigger deal.
STX Charts, page-110
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