Short answer: S&P 500 Index ETF returns will not be affected in the long run.
Here are the reasons:
- S&P 500 index is balanced and spread across different industries, thus it is impossible for all the industries to perform badly the same time.
- There are 500 companies inside the index, that means individual company stock only weight 1/500 or 0.2% of the whole index.
- If all the S&P 500 index stocks perform badly, that will mean all the industries is perform badly, so it will not affect the index position.
- Those inside S&P 500 are selected according to capital and various factor. And a company with huge capital usually will not be wiped out overnight. Even during a panic sells, there are value buyer able to salvage the remaining asset value to support it.
- Due to the above reason, S&P 500 index ETF can always take time to track and balance the stock, i.e. sell-off those stock drop out of S&P 500 index, buy the newcomer.
- the S&P 500 index ETF tracking practice will cause matthew effect to involved stock(the loser stock will fall further, the newly entry stock will go higher). Since each company only weight 0.2%, it hardly dents the ETF coffer.
- S&P 500 index is balanced and spread across different industries, thus it is impossible for all the industries to perform badly the same time.
- There are 500 companies inside the index, that means individual company stock only weight 1/500 or 0.2% of the whole index.
- If all the S&P 500 index stocks perform badly, that will mean all the industries is perform badly, so it will not affect the index position.
- Those inside S&P 500 are selected according to capital and various factor. And a company with huge capital usually will not be wiped out overnight. Even during a panic sells, there are value buyer able to salvage the remaining asset value to support it.
- Due to the above reason, S&P 500 index ETF can always take time to track and balance the stock, i.e. sell-off those stock drop out of S&P 500 index, buy the newcomer.
- the S&P 500 index ETF tracking practice will cause matthew effect to involved stock(the loser stock will fall further, the newly entry stock will go higher). Since each company only weight 0.2%, it hardly dents the ETF coffer.