Excerpt from Reuters quoting DataTrek’s Nick Colas:
“It is always one of the biggest trading days of the year,” said Nicholas Colas, co-founder at DataTrek Research in New York. “To me the one really different thing is this G20 meeting, and we are seeing the effect it has on market sentiment and anything can happen in Osaka.”
Passive funds will rebalance on the day of the reconstitution to minimize any tracking error, while active managers try to take advantage of any price dislocations earlier, resulting in a surge of volume toward the market close as the reconstitution becomes final.
“People are gaming this out kind of through the month of June and trying to figure out what goes in and where,” Colas said”….
Read the full article here on Reuters!