How managers do - Reindexing & Rebalancing?

Lets take the example of UTI nifty index fund

It says reliance has 10.58%, hdfcbk has 8.89%, infy has 8.64% etc. What this means is that - of the total AUM - 10.58% is held in reliance, 8.89% is in hdfcbk etc.

My question
When an investor allocates say 1,00,000 fresh to this MF. How does the asset manager deploys this capital ?

  • Do they buy 10.58% ie 10,580 or reliance, 8890 of hdfcbk immediately
  • Or do they keep it in pool and wait for the NSE free float weightage data and do the rebalancing once a month?

As soon as there are fresh investment, fund manager deploys it in same proportion by day end.
This is necessary to ensure fund track index closely.

Rebalancing entire fund as and when index is revised is a separate periodic exercise

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Fund Manager buy the stocks as per the allocation at the end of day.