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Technology Stocks : America On-Line (AOL)
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To: Voltaire who wrote (382)1/1/1999 2:21:00 PM
From: Cosmo Daisey  Read Replies (2) of 41369
 
Voltaire,
The index funds need to return the results of the index but they don't have to hold all the stocks in the index or the exact percent that makes up the index. Some of the S&P 500 stocks are doing poorly and the funds lighten up on those and more heavily weight the momentum stocks. If they guarantee a payout equal to the index performance and their performance matches it exactly then there isn't any way to cover overhead. The funds may in fact hold a higher percent of AOL then the S&P weighting. The 33 million share figure that is being talked about is the S&P weighting figure. The funds may buy less if they feel that is a better position. If the S&P gains 22 percent and they make 45 percent they still pay 22 percent and keep the rest. The reason for the AOL buying is the stock is a mover and the funds are too cautious not to hold the stock.
cdaiseyPhD@heliopause.com
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