> the index committee is probably hesitant to add more technology firms
This surprised me. I had thought that S&P 500 was an objective list of large cap stocks, without subjective decisions about which companies to include.
This surprised me. I had thought that S&P 500 was an objective list of large cap stocks, without subjective decisions about which companies to include.
You could throw darts at a list of large companies and weight them with some really dumb rules and get an index that's pretty close to "the market"; that's basically what the Dow is.
The difference between even the S&P 500 and a total market index (i.e. all the smaller stocks that exist) is pretty insignificant to returns (and recently bad for them), and I believe the total market funds have become more popular than the traditional S&P 500 ones anyway.
In any case, one of my points is, say you want a fund that tracks the stock market, a Vanguard index fund maybe, and you are concerned about their S&P 500 fund being gamed or "front-run" or whatever you want to call it. You don't trust it. They have a "total market" fund with the same 0.03% expenses. Plus, the AUM are the same or a little more, so you don't even have to go against the herd. So if something did happen to the S&P 500 fund, it seems like it would be inconsequential. Who needs it? And people are going to notice if something is wrong because the differences between the S&P 500 fund and the S&P 500 index, or between the fund and the total market, are so small.
What you need to worry about is some obscure index fund where everybody is not aware of what it should return. Like, I don't know, USO?