The same is the tracking index. Why is there a big income gap between index funds of different companies? How is the income of index funds affected?
First of all, it is affected by the opening period. As we all know, the new fund will enter the opening period after it is successfully raised. During the period of opening a position, the fund's opening a position is to exchange the cash of the fund for assets such as stocks within a certain period of time. If you happen to encounter a rising bull market during the opening period, and your cash has not been converted into stocks, you can't keep up with the increase of the index. Moreover, due to prudent consideration, new funds will not allocate heavy stocks, so most new funds did not increase as much as similar old funds when they were first established.
Another reason is that when the market fluctuates greatly, it is easy to meet a large number of purchase and redemption requirements. The subscription funds need to be allocated into stocks, and the redemption funds need to be sold into cash. Both the time difference and the change of stock position will make the return error between index fund and the tracked index.
In addition, innovation is also an important factor. Winning the lottery will bring benefits to the fund itself. Especially for small-scale funds, once the placement is successful, the income of the fund will increase greatly.
At the same time, in order to cope with redemption, funds usually keep 5% cash for position management, that is, they will not use all their funds to buy stocks. Therefore, if the index goes up, the index fund will lose 5% relative to the index, and when the index goes down, the index fund will also lose 5%.
Dividends will also have an impact on the income of index funds, and stock dividends will have price ex-rights. The net value of these stocks held by index funds will not be affected, but due to dividends, the index will naturally fall back, which will have a greater impact on the index with higher dividend yield.