Index funds - what happens when a constituent delists?
Discussion
Just as an example, I hear that Hargreaves Lansdown plc is being bought by private equity. Apparently HL shareholders will get a sizeable dividend due to the sale.
But since its shares will no longer be publicly listed, what happens to FTSE 100 index funds/ETFs that previously held HL shares? Do they get this dividend and redistribute it to holders of the fund? I presume they must also sell the shares since they are no longer part of the index.
But since its shares will no longer be publicly listed, what happens to FTSE 100 index funds/ETFs that previously held HL shares? Do they get this dividend and redistribute it to holders of the fund? I presume they must also sell the shares since they are no longer part of the index.
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