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I seems like there should be an opportunity for active investors to make money off of all the passively managed money. All I can think of would be to take adva

I seems like there should be an opportunity for active investors to make money off of all the passively managed money. All I can think of would be to take advantage of the margin of the index. For example buy stock #501 and a discount and sell when it crosses into the sp 500 since vanguard will prop up the price by buying it for tge index fund. Similarly shorting #499. I'm sure that the market has gotten more sophisticated than this though. So how does it work in practice?

tanderson92 9y ago
Look here: https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0040#tab=2 https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I... The Vanguard S&P500 index fund currently contains 511 stocks. Even the S&P500 index itself holds 505 stocks.
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kgwgk 9y ago
It's not obvious when a company is going to be added to an index. The strategy may work, but there are no guarantees. https://www.indexologyblog.com/2015/07/07/inside-the-sp-500-adds-drops-and-tall-tales/ https://www.indexologyblog.com/2015/07/07/inside-the-sp-500-... https://www.usatoday.com/story/money/columnist/krantz/2013/07/05/stocks-soar-added-sp-500/2447185/ https://www.usatoday.com/story/money/columnist/krantz/2013/0...