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This example does not work. If Apple raises from 5% to 8% of the SP500, it also raises from 5% to 8% of your portfolio. No rebalancing is needed when weighting
by Hermel 10y ago
This example does not work. If Apple raises from 5% to 8% of the SP500, it also raises from 5% to 8% of your portfolio. No rebalancing is needed when weighting stocks by market cap.
- deleted 10y ago[deleted]
- anonu 10y agoThat's correct. A passive index manager is passive - they don't have to worry about some balancing act. It differs from active management because the manager isn't making decisions about which stocks are in the fund. Where the passive fund manager has to do work is on index rebalances and on any constituent corporate action.