RE: GDXJ Q3 Rebalance10 Sep 2022 13:23
Rational Assessor posted an excellent summary of how the GDXJ rebalances work on TG a couple of days ago and I've pasted below:
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So, my understanding of GDXJ buys and sells is as follows:
On a daily basis, the GDXJ will buy and sell all of the equities in the fund as money enters and leaves the fund (ie investors buy and sell into and out of the GDXJ). The volume of the buys and sell are in the proportions as defined at the previous rebalance. Therefore, as mentioned above, if investors buy into GDXJ by $1M, 0.58% of that investment will be made in GGP ie $5800. The opposite happens if folks sell out of the GDXJ.
On a quarterly basis, the fund rebalances. This is where the MCAPs of all constituents are added together and the proportion (for each equity) of the overall MCAP of all the constituents is calculated. This is also when new equities are added and some equities are discarded (as they no longer meet the fund's criteria). The fund will perform this calculation based upon a cut of data taken (in this case) on 31 August, they will announce the new proportions on 9th September and then buy or sell on 16th Sep.
It is the quarterly moves which can be relatively large and the calculations will be affected by SP, shares in issue, number of free shares and exchange rates. These large buys and sells are seen as opportunities to collect or sell by many who look to trade and who understand the finer mechanics of the rebalancing process.
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Thanks to Rational Assessor for making this so clear :-))
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