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chromaton

Is there an S&P 5 index fund or ETF?

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S&P 100, Russell 50/200:

* https://en.wikipedia.org/wiki/S%26P_100

* https://en.wikipedia.org/wiki/IShares_S%26P_100

* https://en.wikipedia.org/wiki/Russell_Top_50_Index

* https://en.wikipedia.org/wiki/Russell_Top_200_Index

Given that the most popular high-flyers are tech companies, you can go with the NASDAQ perhaps:

* https://en.wikipedia.org/wiki/NASDAQ-100

Though generally speaking, diversification generally gets better results:

* https://www.pwlcapital.com/should-you-invest-in-the-sp-500-i...

And don't forget some bonds, so when the inevitable dips occurs (e.g., March), you have something you can liquidate to rebalance:

* https://www.forbes.com/sites/investor/2010/12/17/the-lost-de...

At a top 5 level, it's pretty straightforward to just invest in the individual stocks. You could rebalance now and then if you want to keep a particular weighting formula but there's nothing magic about the way that indexes weight.

How do you test the historic returns of this strategy?

I assume the composition of the S&P 500 is a matter of public record. As is the stock price of public companies. Seems pretty straightforward. I don't know if the exact weighting formula is public but you could at least approximate.

You're essentially looking at replicating the DJIA for companies that may not be on the Dow Jones. Part of me assumes this has been done but interesting.

The real trick would be if you could select the 5 stocks to include in the fund based on the largest future price appreciation rather than something simple such as the top 5 stocks with largest market cap.

if you're only dealing with five stocks, why not just rebalance your holdings yourself every month or so? plenty of zero-commission options these days.

No need to rebalance if it is market cap weighted

You need to rebalance if the stocks included in your top 5 index change, i.e. if some new stock displaces one of your original 5. Otherwise you've got a fund of 5 stocks chosen by some metric on historical date blah -- which may be a reasonable idea but doesn't seem to align with the spirit of "S&P 5".

ETF format can more easily defer capital gains with losses. Though the more stocks in the index, the more economic situations in can do this. It wouldn't be possible if the index was just 5 stocks and they all gained disproportionately.

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