re: Ann: ZSP: S&P DJ Indices Announces June Q... Michael Yoni,...

re: Ann: ZSP: S&P DJ Indices Announces June Q...
Michael Yoni, have a read of these articles, it may help you? especially this bit "many mutual funds and exchange-traded funds attempt to "track" an index (see index fund)" what they are saying basically is that these funds try and maintain their weighting of shares in the ASX top 50 for instance, that means that when a share becomes part of that index those funds are basically forced to but that share just to maintain their weighting for that index.


A stock index or stock market index is a method of measuring the value of a section of the stock market. It is computed from the prices of selected stocks (sometimes a weighted average). It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments.

An index is a mathematical construct, so it may not be invested in directly. But many mutual funds and exchange-traded funds attempt to "track" an index (see index fund), and those funds that do may not be judged against those that do not.

http://en.wikipedia.org/wiki/Stock_market_index


The S&P/ASX 200 index is a market-capitalization weighted and float-adjusted stock market index of Australian stocks listed on the Australian Securities Exchange from Standard & Poor's. It was started on 31 March 2000 with a value of 3133.3,[1] equal to the value of the All Ordinaries at that date.

The ASX 200 reached 6,000 points for the first time on Thursday 15 February 2007.

The ASX 200 is capitalization-weighted, meaning a company's contribution to the index is relative to its total market value i.e. share price x number of tradeable shares. The ASX 200 is also float adjusted, meaning the absolute numerical contribution to the index is relative to the stock's value at the float of the stock.[3]

Although the calculation starts with a sum of the market capitalisation of the constituent stocks, it's intended to reflect changes in share price, NOT market capitalisation. Therefore a fudge factor called the "Divisor" is used to ensure that the index value only changes when stock prices change, not whenever market capitalisation changes. For example, if a company increases its market capitalisation by issuing new shares, the Divisor is adjusted so that the ASX 200 index value does not change.

http://en.wikipedia.org/wiki/S%26P/ASX_200