Forum Archive Index - May 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Simin,
 
>
> Will the launch of NZSE 50 bring disadvantage to the index fund 
> manager or just bring advantage to them?
> 

The job on the index fund manager is to mirror the index, whatever it is.
The NZSE50  index includes dividends.  This means that in order to 
mirror this index, an index fund manager must retain earnings and not 
pay them out to index fund holders ( I think!).

How this will work in practice I am not sure.  Will index fund managers 
be required to keep a large cash account into which all dividends are 
paid?  Perhaps I have got it wrong, but your question is interesting 
Simin.

Perhaps someone who is involved in the index fund industry might like 
to comment?    Does this mean more work for index fund managers so 
that fees must go up?

SNOOPY

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