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Funds have allocation % between different assets. As a simple example, let’s say a fund is 70% stocks and 30% bonds. After the massive sell off in stocks, the allocation changed to say 50% stocks and 50% bonds. The fund at month or quarter end will sell 40% of the bonds and use the proceeds to
Purchase stocks to get back to target allocation of 70/30. Putting that money in the stock
Market will drive prices up. Hope that makes sense.
Coach
Thanks for the detailed explanation! Really helpful!