Thursday, January 22, 2009

No More KLCI

In near future 6 July 2009, KLCI will NO longer be used as the index for KLSE.  It will be replaced by FTSE Busra Malaysia - FBM KLCI, or FBM30 which consist of 30 stocks, instead of 100 in KLCI.

Stock in FBM30 but not in KLCI in favor : Resorts, YTL, Parkson ...
The drop outs may not in favor : Gamuda, SP Setia ...

Bear in mind one of the fundamental fund manager portfolios is usually an index fund.  And they are benchmarking their fund performance with country's index ie. KLCI in the past.  Changing the country's index components means the fund managers may have to change their strategy too.

Generally this is good news ....  to general public especially mutual fund investors.  What will happen in short term is the not-so-good index fund will drop significantly but eventually all index fund are performing quite the same ....