3 ms·

At least all the index funds are obligated to, right?

whateveracct 5mo ago
you and me will all be left holding a small cut of the bag
chilipepperhott 5mo ago
Most index funds wait for at least a year before adding a new listing. The only exception that I'm aware of is QQQ and SpaceX.
- qwytw 5mo ago
  Technically they couldn't be added to the S&P 500 etc. until they become profitable.
- nemomarx 5mo ago
  If space x gets an exception, why wouldn't anthropic?
- ac29 5mo ago
  Not true for Vanguard's total US stock market fund (VTSAX/VTI), the largest total US stock market fund in the world. Their CRSP index only requires 20 trading days post IPO, or 5 for large caps (this has been true for many years, this is not a recent change)
  - exabrial 5mo ago
    Holy shit. With VTI being a monster, how have they survived this long?
    - nemomarx 5mo ago
      vti slightly out performs s&p I think? or it has for the last few decades for sure.
  - chilipepperhott 5mo ago
    Sure, but how often do they rebalance the fund?
nly 5mo ago
Index funds follow indices and often only rebalance quarterly
qwytw 5mo ago
Based on current rules they wouldn't included in the S&P 500 for at least several years even based on optimistic scenarios. Of course IIRC they looking into tweaking the rules to allow some handpicked extremely unprofitable companies in, due to "reasons"....
- s1artibartfast 5mo ago
  They are scared of underperfoming the market and failing to exist as an index. Losing money with everyone else is a more sustainable risk than losing money while other indexes go up.
DenisM 5mo ago
company must have a history of profitability before being included in the S&P 500
bluGill 5mo ago
Maybe. If you read the fine print they are not. They have the goal of matching the index returns, but they never say anywhere they have exactly the stocks in the index. Index funds all make active choices and often hold companies not in the original index. They are more passive than a traditional funds that buys and sells all the time, but they still make active choices. When an index changes stocks they can look up the price - but the funds mirroring the index need to make real trades that if not carefully done will change the value of the stocks (and cause the fund to under perform the index), so index funds have plans to prevent this. Compared to a traditional fund an index fund looks passive and there is much much less for the manager to do - but that doesn't mean the managers do nothing.
outside1234 5mo ago
But only the amount the company floats for many index funds. So in the case of SpaceX, they are only floating 5% of the company. So the number of shares something like VTI has to buy is much smaller than the total market cap (5% of it).

you and me will all be left holding a small cut of the bag

Most index funds wait for at least a year before adding a new listing. The only exception that I'm aware of is QQQ and SpaceX.

qwytw 5mo ago
Technically they couldn't be added to the S&P 500 etc. until they become profitable.
nemomarx 5mo ago
If space x gets an exception, why wouldn't anthropic?
ac29 5mo ago
Not true for Vanguard's total US stock market fund (VTSAX/VTI), the largest total US stock market fund in the world. Their CRSP index only requires 20 trading days post IPO, or 5 for large caps (this has been true for many years, this is not a recent change)
- exabrial 5mo ago
  Holy shit. With VTI being a monster, how have they survived this long?
  - nemomarx 5mo ago
    vti slightly out performs s&p I think? or it has for the last few decades for sure.
- chilipepperhott 5mo ago
  Sure, but how often do they rebalance the fund?

nly 5mo ago

Index funds follow indices and often only rebalance quarterly

qwytw 5mo ago

Based on current rules they wouldn't included in the S&P 500 for at least several years even based on optimistic scenarios. Of course IIRC they looking into tweaking the rules to allow some handpicked extremely unprofitable companies in, due to "reasons"....

s1artibartfast 5mo ago
They are scared of underperfoming the market and failing to exist as an index. Losing money with everyone else is a more sustainable risk than losing money while other indexes go up.

DenisM 5mo ago

company must have a history of profitability before being included in the S&P 500

bluGill 5mo ago

Maybe. If you read the fine print they are not. They have the goal of matching the index returns, but they never say anywhere they have exactly the stocks in the index. Index funds all make active choices and often hold companies not in the original index. They are more passive than a traditional funds that buys and sells all the time, but they still make active choices. When an index changes stocks they can look up the price - but the funds mirroring the index need to make real trades that if not carefully done will change the value of the stocks (and cause the fund to under perform the index), so index funds have plans to prevent this. Compared to a traditional fund an index fund looks passive and there is much much less for the manager to do - but that doesn't mean the managers do nothing.

outside1234 5mo ago

But only the amount the company floats for many index funds. So in the case of SpaceX, they are only floating 5% of the company. So the number of shares something like VTI has to buy is much smaller than the total market cap (5% of it).