Normal
Hi SKCJust to take this a little further. Accept everything you say about the rebalancing producing a higher return then a buy and hold of whatever made up the index in 1910 - you would probably be left tracking nothing today.But I'm not sure that is the point for me. Its more along the lines is the N/E depicted by the index aided by the selection process of the constituents. ie is it giving me a picture of the underlying environment or is capitalisation as a stock selection process adding (detracting) from the picture.Across the entire market companies come and go - I think the XAO covers a fair proportion of the market movement ~95% of capitalisation at the moment, not sure if it has always been that high. I,m not sure that what it doesn't capture - the 5% where companies are born and die or just plain small would alter the picture significantly and if they alter it at all what's the net effect.
Hi SKC
Just to take this a little further. Accept everything you say about the rebalancing producing a higher return then a buy and hold of whatever made up the index in 1910 - you would probably be left tracking nothing today.
But I'm not sure that is the point for me. Its more along the lines is the N/E depicted by the index aided by the selection process of the constituents. ie is it giving me a picture of the underlying environment or is capitalisation as a stock selection process adding (detracting) from the picture.
Across the entire market companies come and go - I think the XAO covers a fair proportion of the market movement ~95% of capitalisation at the moment, not sure if it has always been that high. I,m not sure that what it doesn't capture - the 5% where companies are born and die or just plain small would alter the picture significantly and if they alter it at all what's the net effect.
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