Why is the Cambrian weight downgraded and will it trigger a fund sell-off? Authoritative answers are coming.

After the closing on September 12th, the weights of the constituent stocks of the sci-tech innovation board 50 index will be adjusted, which includes the popular stock Cambricon. The recent sharp adjustment in Cambricon's stock price is believed to be due to its weight in the sci-tech 50 index exceeding 10%, which may force passive funds to reduce their positions. Will this lead to a large number of ETFs selling off? The Shanghai Stock Exchange Investment Education released a video explaining that a large amount of ETF selling may not reflect the actual situation. ETFs need to accurately replicate the index, deviating too much will hurt their reputation. Therefore, fund companies generally do not change their positions too far in advance, but rather complete the adjustments around the implementation date, taking into consideration market liquidity and gradually aligning their positions with the index in a refined manner. Additionally, different fund managers have different operating rhythms, which can objectively achieve diversification. This type of operation is a daily activity for fund companies.