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That’s not how the vast majority of index funds work. Most s&p 500 index funds are market cap weight, not equal weight. A fund weighted by market cap only need
by javagram 5y ago
That’s not how the vast majority of index funds work. Most s&p 500 index funds are market cap weight, not equal weight.
A fund weighted by market cap only needs to sell shares when/if shareholders decide to cash out of the entire fund.
- jjeaff 5y agoThat's not correct. If you are market cap weighted and Tesla prices crash, that lowers the market cap of Tesla thus making it a smaller percentage of the total market cap of the index. Or, if some of the other companies were to take off and increase their market cap, same thing, the fund will need to sell Tesla shares to redistribute the fund by market cap.