FAQs

Question

Why does an Index need to be rebalanced?

Answer

Companies change over time. Those companies whose performance is a good guide to the current state of the market at a particular point in time, may not be the best at a later time. This is because the dynamics of a particular set of companies may not match that of the market at a later time. The Index must truly represent the current market conditions. Index weights depend on Market Capitalization of the index constituents., Hence weights of the index constituents need to reflect current market capitalizations.



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