CTV.ca – The hedge funds got trimmed late yesterday, when many income trusts were hit by an unexpected drop in price as the sector joined the S&P/TSX composite index.
For weeks, Bay Street professional traders have been loading up on trusts, anticipating selling into the demand from passive investors such as index funds late yesterday, when 72 trusts joined the Canadian equity benchmark in a widely advertised shift in index membership. Industry experts estimated the hedge funds held $500-million of trusts heading into yesterday’s trading, and projected potential demand from passive investors would run to $1.5-billion.
But in the busiest late-day trading the Toronto Stock Exchange has ever seen, the selling from the pro traders outweighed the demand from the index crowd, who did some of their shopping earlier in the week. So the prices of many trusts dropped sharply in the last few minutes of the session.
