4 ms·

The S&P 500 may not be a fund itself, but Standard & Poor's is a business whose ability to sell services is correlated with the continued relevance of the S&P 5

by btown 4mo ago

The S&P 500 may not be a fund itself, but Standard & Poor's is a business whose ability to sell services is correlated with the continued relevance of the S&P 500. It absolutely does balance interests - namely, its own - beyond simply being an academic vehicle for communication of a stable thesis. It seems entirely reasonable to say: "if we make a certain decision, we correlate both our reputation and a nontrivial portion of the U.S. economy with the whims of one of the most volatile personalities in industry, and we should likely pay attention to this trial balloon that shows such anticipatory fear of the decision that we might lose our reputation as an index altogether."

JumpCrisscross 4mo ago
> absolutely does balance interests - namely, its own - beyond simply being an academic vehicle for communication of a stable thesis As a business, sure. As a committee, it’s still a deeply technical process. I can say with a lot of confidence that optics weren’t considered in any of this, possibly to a fault. > and a nontrivial portion of the U.S. economy This vastly overstates the amount of assets tied to the S&P 500. It’s a lot. But it’s a strong minority of equity exposures.
- snypher 4mo ago
  There's overlap between strong minority and nontrivial, so not sure how it can be vastly overstated. Do you have numbers you can add to this, or any explanation of equity exposure etc?
- lmm 4mo ago
  > I can say with a lot of confidence that optics weren’t considered in any of this, possibly to a fault. How can you possibly know that? Do the people on that committee have a cast-iron tenure guarantee?
  - JumpCrisscross 4mo ago
    > How can you possibly know that? I know folks who have been on these. They don’t have tenure. But they’re basically emeritus. If S&P wanted to do something that would cause chaos, it would be fucking with those folks because they made a decision that looks bad.
    - lovich 4mo ago
      It’s a public benchmark fund that has much of its value based on its decisions being publicly stable and publicly consistent. Who would want to invest in a benchmark fund with arcane(the literal term as opposed to mundane) rules that were privately decided? If your statement is accurate it sounds like moving out of such a fund would be prudent. I feel like it’s not accurate since they are sticking to their guns and not changing the rules to benefit oligarchs like Musk such as Nasdaq is doing.
      - JumpCrisscross 4mo ago
        > Who would want to invest in a benchmark fund with arcane(the literal term as opposed to mundane) rules that were privately decided? There are lots of rules-based funds. S&P is transparently committee based. It’s why dual-class new entrants are banned, but Google and Berkshire are grandfathered in. There is a genuine debate on rules versus committees in the index world. But S&P has stuck to its guns as a bastion of the latter. And it works. Everyone picking the S&P 500 over its competitors chooses that.
        maest 4mo ago
        > Everyone picking the S&P 500 over its competitors chooses that. I'm fairly confident most people deciding to allocate to s&p trackers have no idea about rules-based vs committee-based governance. They just pick the default. And that default can quickly change if the S&P starts making weird/unpopular decisions in a highly publicized situation.
        JumpCrisscross 4mo ago
- btown 4mo ago
  Doesn't https://advisors.vanguard.com/investments/products/vfiax/vanguard-500-index-fund-admiral-shares https://advisors.vanguard.com/investments/products/vfiax/van... have $1.7T in AUM alone? That single fund is already a significant part of the $20.8T in AUM across index funds. https://www.ici.org/research/stats/combined_active_index_0426 https://www.ici.org/research/stats/combined_active_index_042...

by btown 4mo ago

JumpCrisscross 4mo ago

> absolutely does balance interests - namely, its own - beyond simply being an academic vehicle for communication of a stable thesis As a business, sure. As a committee, it’s still a deeply technical process. I can say with a lot of confidence that optics weren’t considered in any of this, possibly to a fault. > and a nontrivial portion of the U.S. economy This vastly overstates the amount of assets tied to the S&P 500. It’s a lot. But it’s a strong minority of equity exposures.

snypher 4mo ago
There's overlap between strong minority and nontrivial, so not sure how it can be vastly overstated. Do you have numbers you can add to this, or any explanation of equity exposure etc?
lmm 4mo ago
> I can say with a lot of confidence that optics weren’t considered in any of this, possibly to a fault. How can you possibly know that? Do the people on that committee have a cast-iron tenure guarantee?
- JumpCrisscross 4mo ago
  > How can you possibly know that? I know folks who have been on these. They don’t have tenure. But they’re basically emeritus. If S&P wanted to do something that would cause chaos, it would be fucking with those folks because they made a decision that looks bad.
  - lovich 4mo ago
    It’s a public benchmark fund that has much of its value based on its decisions being publicly stable and publicly consistent. Who would want to invest in a benchmark fund with arcane(the literal term as opposed to mundane) rules that were privately decided? If your statement is accurate it sounds like moving out of such a fund would be prudent. I feel like it’s not accurate since they are sticking to their guns and not changing the rules to benefit oligarchs like Musk such as Nasdaq is doing.
    - JumpCrisscross 4mo ago
      > Who would want to invest in a benchmark fund with arcane(the literal term as opposed to mundane) rules that were privately decided? There are lots of rules-based funds. S&P is transparently committee based. It’s why dual-class new entrants are banned, but Google and Berkshire are grandfathered in. There is a genuine debate on rules versus committees in the index world. But S&P has stuck to its guns as a bastion of the latter. And it works. Everyone picking the S&P 500 over its competitors chooses that.
      - maest 4mo ago
        > Everyone picking the S&P 500 over its competitors chooses that. I'm fairly confident most people deciding to allocate to s&p trackers have no idea about rules-based vs committee-based governance. They just pick the default. And that default can quickly change if the S&P starts making weird/unpopular decisions in a highly publicized situation.
        JumpCrisscross 4mo ago
btown 4mo ago
Doesn't https://advisors.vanguard.com/investments/products/vfiax/vanguard-500-index-fund-admiral-shares https://advisors.vanguard.com/investments/products/vfiax/van... have $1.7T in AUM alone? That single fund is already a significant part of the $20.8T in AUM across index funds. https://www.ici.org/research/stats/combined_active_index_0426 https://www.ici.org/research/stats/combined_active_index_042...