Stupid SATRIX question

[#1]

Would someone please help me get my thick head around this: STX40 is weighted on market capitalisation and heavily favours the resource shares. STXDIV is weighted on fundamentals and has some resource shares but excludes some of the biggies like Anglo and BHP so I think will be less dependent on resources. My question is this: If you hold both STX40 and STXDIV is it still necessary to spread your risk by also holding STXIND and STXFIN so that you're not too heavily invested in resources? I ask because STXIND and STXFIN together only have 7 shares that are not in either both or one of STX40 and STXDIV.

[SimonPB]

Jezebel, I have in the past looked at also buying the STX indi25 and fin15 to reduce the resource exposure from the STX40. But right now over weight resources has been good to me so I have left it. However you raise a good point and the STX Divi will to a fair degree reduce your resource exposure. I suppose the question is how much do you want to reduce it by? If a lot then either also get indi25 and fini15 or you could just increase your divi exposure.

In short no real answer, cept to be careful of over complicating things?

[#3]

Thanks, Simon, for the good-sense advice as always. It does seems a bit much to have all 4 STXs with all that overlapping, but provided I don't get stopped out before the market settles back into a bullish trend, I think I'll keep the INDs and FINs I already have but not add to them. Have yourself a lovely little weekend.

[SimonPB]

it's all the over lapping that's worried me, albeit it does reduce the AGL, BIL, etc. weight it does then seriously increase some of the otherwise smaller ones. Have you had a look at teh STX Swix, it should reduce the big resoucre stocks weight? As I said this is an issue I have wondered about, but the booming commodities have allowed me to be lazy and not dig very deep.

[#5]

I did have SWIX for a short while once, but I remember being put off because it didn't perform as well as STX40. Huh! And there's your proof that you were right to be overweight in resources! I think I need to think some more, and there's no rush because I'm being passive at the moment and seeing if I'm going to be stopped out of things. By the way, we are still in a correction/pullback in a bull market, aren't we?

[SimonPB]

correction/pullback in a bull market; sure. Things may change but for now that's where I figure we are.