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Influence of passive allocation of index funds on individual stocks
1. Increase or decrease in market demand. The number and proportion of stocks in the index fund portfolio directly affect the market demand. When index funds increase the weight of a stock, the market demand will increase, which will have a positive impact on the price and trading volume of this stock. On the contrary, if the index fund reduces the weight of a stock, the market demand will decrease, which will have a negative impact on the price and trading volume of this stock.

2. The impact of capital flows. The holdings and liquidity of index funds are large, and the trading behavior will have a great impact on the market. An index fund holding more shares will attract more funds into this stock, which will make investors in the market more optimistic about the prospect of this stock. On the contrary, the index fund's reduction of a stock will lead to more funds flowing out of the stock, which will lead to a decline in the stock price or a decrease in trading volume.