4 ms·
Why can't an index fund compute and track their own objective index, thus ignoring any distortion introduced by the Nasdaq?
by femto 7mo ago
Why can't an index fund compute and track their own objective index, thus ignoring any distortion introduced by the Nasdaq?
- tverbeure 7mo agoBecause when I buy QQQ expect it to track the Nasdaq-100, not something else.
- bagacrap 7mo agoVast majority of index funds do not track NASDAQ 100.
- wredcoll 7mo agoThis is the detail I'd really like to know more about
- bagacrap 7mo agoThe top 3 most popular index fund ETFs track S&P500, which doesn't really pull this kind of shenanigan. Only QQQ tracks the NASDAQ 100 and it's in 5th place by assets under management. You should probably read a book about index investing if you are going to invest.
- nighthawk454 7mo agoYeah, but the S&P500 is hugely concentrated in MAG7, which are all Nasdaq listed. So when they all get sold to buy SpaceX, you can bet your butt something's gonna happen to a S&P500 ETF.
- deleted 7mo ago[deleted]
- bagacrap 7mo agoSPY is somewhat concentrated in mag7 (or the other 93 stocks in QQQ), but only a small percent of mag 7 are owned via QQQ, which has 400B aum. (Mag 7 is 19T.) The bottom line is all this fuckery is a tiny blip for most investors. It's far more concerning to me the societal harm that will come from further enriching Elon.
- aloha2436 7mo agoThey don't target something else because they wouldn't be an index fund, that's just a passive fund with their own published strategy. Those exist but aren't as popular, the appeal of index funds is that you're just getting "the market" and "the market" is measured by the index. Public indexes are supposed to be lower-cost and less manipulable, but that was before they got large enough to "wag the dog," which is the ultimate point of the article.