My understanding of index rebalancing is that a fund /bank/investor may have certain guidelines / rules to govern their portfolios, 50-50, 60-40 etc of equities, bonds, cash, property etc.
Now if a company's performance places it up/down an index (eg FMG into ASX 50 price went down with great fundamentals IMO, but off topic, so I'll leave that) then it affects the ratios of holders.
I believe all ASX done quarterly, but could be wrong, and all Ords once a year.
It opens up a whole lot of holes in the average punter's investment strategy as the unknown affects of a rebalance could drain the resources a bit.
Plus there are complicated beta and other strategies which are a bit beyond my capabilities of explaining.
srm777
What will March Bring ?, page-257
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