A. Some fixes tend to be more active than others. Some of the busiest come at the end of the month when passive investors rebalance their portfolios. Here is a simple illustration: Let’s say the US equity market outperforms the European market by 5% in a given month. That will make the portfolio 5% longer of dollar’s than it was at the beginning of the month. Managers of passive portfolios (like index funds) will sell the “extra” dollars and buy euros to bring the overall fund back into balance.
These flows can be very heavy at the end of the month and particularly heavy at the end of a quarter.
