---
title: "The season of \"blood replacement\" for indices has arrived! Do you understand the intricacies behind the portfolio adjustments?"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/280277979.md"
description: "Every March, June, September, and December, the capital market undergoes quarterly rebalancing. The CNI Free Cash Flow Index completed its adjustment for the first quarter of 2026 on March 16, with the weight of oil and petrochemicals decreasing by 3 percentage points, and the weight of home appliances and automobiles increasing by 2 percentage points. This adjustment involved only 8 constituent stocks, a significant decrease from 44 in June of last year. The rebalancing is divided into three categories: semi-annual rebalancing (such as CSI 300), quarterly rebalancing (such as CNI Free Cash Flow Index), and annual rebalancing (such as dividend indices). The frequency of rebalancing for different types of indices reflects their varying demands for timeliness and stability"
datetime: "2026-03-24T07:54:18.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/280277979.md)
  - [en](https://longbridge.com/en/news/280277979.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/280277979.md)
---

# The season of "blood replacement" for indices has arrived! Do you understand the intricacies behind the portfolio adjustments?

Every March, June, September, and December, the capital market welcomes a "regular blood exchange"—the quarterly adjustment of indices.

For example, the CNI Free Cash Flow Index (related ETF: Free Cash Flow ETF 159201/Link Class C 023918) just completed its adjustment for the first quarter of 2026 on March 16, with the weight of oil and petrochemicals reduced by 3 percentage points, and the weight of home appliances and automobiles increased by 2 percentage points. However, there is an interesting phenomenon this time—the number of adjusted constituent stocks is only 8, in stark contrast to the one-time adjustment of 44 constituent stocks last June. Why is there sometimes a "major overhaul" and sometimes a "minor adjustment"? What does it mean for ordinary investors?

01

1.  Which indices undergo "quarterly adjustments"?

First, we need to clarify that not all indices adjust at the same frequency. Generally speaking, index adjustments can be divided into three categories:

The first category: semi-annual adjustments, represented by mainstream broad-based indices like the CSI 300. Adjustments occur once in June and once in December each year, with the number of adjustments generally not exceeding 10%. This is the classic adjustment rhythm of A-shares.

The second category: quarterly adjustments, represented by some strategy indices and technology-focused broad-based indices. For example, the CNI Free Cash Flow Index, which many of us have been paying attention to recently, adjusts once every quarter, specifically on the next trading day after the second Friday of March, June, September, and December. Additionally, indices like the Sci-Tech 50 and Sci-Tech 100, which focus on hard technology, also undergo quarterly adjustments.

The third category: annual adjustments, where some dividend indices choose to adjust once a year, with a slower rhythm.

Why is there such a significant difference in adjustment rhythms? There is actually a deeper logic behind this: different types of indices weigh "timeliness" and "stability" differently. For example, the pace of innovation in the technology sector is extremely fast; companies on the Sci-Tech Board may see a batch of new entrants rise and a batch fall behind within a single quarter. Therefore, indices like the Sci-Tech 50 and the CNI Free Cash Flow Index adopt quarterly adjustments to more sensitively capture the latest changes in corporate fundamentals. In contrast, broad-based indices like the CSI 300, which represent the overall landscape of the national economy, pursue "stability," and adjusting once every six months is usually sufficient, with no need for frequent changes.

02

Where can I find adjustment information?

So where can we find this adjustment information? Here’s an authoritative channel for you: the official websites of index companies. For example, the main index publishing institutions in China include the China Securities Index Company and the CNI Index Company. You just need to log onto their official websites, search for the index code you are interested in, and you can find the "Index Compilation Plan." The compilation plan will clearly state: what the selection criteria are, what the weighting method is, and when the adjustment frequency is. You can also find the latest adjustment announcements.

![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OI8Do5t3aAezsoBMUtA0C741h2lUhg7A3Oao8gjTviK9oAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)! ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OBwBo0quFnNE6ZpjS_AGP7bcWYcOUljH-4O8jGp6xZw0wAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

Screenshot source: China Securities Index official website. The above index display is for example only and does not constitute investment advice.

Taking the CNI Free Cash Flow Index as an example, there is a noteworthy aspect of this rebalancing: the number of constituent stocks adjusted is 8, which stands in stark contrast to the one-time adjustment of 44 constituent stocks last December.

Why are there so many fewer individual stocks in this change?

This brings us to the index compilation rules. The selection of the CNI Free Cash Flow Index has a strict screening mechanism: excluding financial real estate, excluding those with poor ROE stability, excluding those with low operating cash flow ratios, and then selecting the top 100 based on free cash flow rate. The last adjustment of 44 stocks may have been due to significant changes in corporate financial data between quarters or drastic rotations in industry prosperity; whereas this time only 8 stocks were adjusted, indicating an overall increase in the stability of the constituent stocks, and the cash flow quality of leading companies has relatively solidified, naturally slowing down the pace of survival of the fittest.

![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OOEG-8uDUOPVTq632aM9FLpDmIn1y-8wdRBEtTgoBvhaMAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

The above information source: China Securities Index official website. Not for individual stock recommendations.

03

1.  What does rebalancing mean for individual stocks? Can short-term trading be done?

Next, let's discuss a question that many people will be very concerned about: regarding the stocks involved in the index rebalancing, can one take the opportunity to trade short-term? From a funding perspective, the logic is straightforward. When a stock is added to an index, it means that passive funds will buy it; when it is removed, the corresponding passive funds will sell it. This buying and selling behavior itself will have a certain impact on the stock price.

However, I need to pour a bucket of cold water on this. This "dividend" is usually fully speculated in advance, such as by professional quantitative funds and arbitrage funds, and the short-term trading costs are high with significant risks.

Around the effective date of the rebalancing, a large amount of capital is concentrated in buying and selling, leading to severe stock price fluctuations, making it extremely difficult to time the market accurately. Moreover, returning to the original intention of index rebalancing, it is not meant to create short-term opportunities but to ensure that the index always maintains "representativeness," so it is not recommended for everyone to engage in short-term speculation around index rebalancing.

Investors can trade the above ETFs on the stock exchange like buying and selling stocks, with the main costs being brokerage commissions and fund operating expenses (including a management fee of 0.15% per year and a custody fee of 0.05% per year, both deducted from fund assets). The primary market subscription/redemption fee rate is <0.50%. The ChinaAMC CNI Free Cash Flow ETF initiator link Class C has no subscription fee but charges a sales service fee of 0.2% per year, with redemption fees: holding period <7 days, 1.5%; holding period ≥7 days, 0%. Class A funds charge a one-time subscription fee with no sales service fee; Class C has no subscription fee but charges a sales service fee. Due to differences in fee structures, establishment times, etc., long-term performance may vary significantly, please refer to the product's regular reports for details Risk Warning: This information is for service purposes only and does not constitute a recommendation for individual stocks, nor does it provide substantial advice or commitments to investors, and it is not a legal document. 1. The risk level of the above ETFs and their corresponding linked funds is R4 (medium to high risk), and the specific risk rating results are subject to the ratings provided by the fund manager and sales institutions. 2. ETFs are subject to major risks such as deviations between the returns of the underlying index and the average returns of the stock market, fluctuations of the underlying index, and deviations between the returns of the fund's investment portfolio and the returns of the underlying index. Linked funds have unique risks such as tracking deviation risk and performance differences with the target ETF, and past performance of the market or related products does not guarantee future results. 3. Investors should carefully read the fund's legal documents, including the "Fund Contract," "Prospectus," and "Product Information Summary," before investing in the fund, fully understand the risk-return characteristics and product features of the fund, and consider their own risk tolerance based on factors such as investment objectives, investment duration, investment experience, and asset status, making rational judgments and cautious investment decisions based on an understanding of the product situation and sales suitability opinions, and independently bear investment risks. 4. The fund manager does not guarantee that the fund will be profitable, nor does it guarantee a minimum return. The past performance of the fund and its net asset value does not indicate its future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of the fund's performance. 5. The fund manager reminds investors of the "buyer bears the risk" principle in fund investment; after investors make investment decisions, they are responsible for the investment risks arising from the fund's operational status, fluctuations in the trading price of fund shares, and changes in the fund's net asset value. 6. The registration of the fund by the China Securities Regulatory Commission does not indicate a substantial judgment or guarantee regarding the investment value, market prospects, and returns of the fund, nor does it indicate that investing in the fund is risk-free. 7. The product is issued and managed by ChinaAMC, and the sales agency does not bear responsibility for the investment, redemption, and risk management of the product. 8. The market has risks, and investment should be cautious

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