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My question is this: for ETF or mutual fund such as VTSAX, VTI, VOO, SPY, or even QQQ, a lot of time, it has the top 10 holdings such as Apple or Microsoft, and it is because these stocks have grown up the most over the years.

And I don't think the fund is going to "sell the winners and buy the losers" so that it is "evenly distributed" among all stocks in the fund.

So, is it true that a fund that has an inception date of 2011 will be different from one that has an inception of today, or in 2000 or 1990?

For example, if one has an inception of today, it really would buy an equal dollar amount of all stocks in the fund, so they key point is, not all index funds are the same, even if they both basically have S&P 500 stocks, because one could be holding 6% in Apple stocks, while one is 0.2% (because 1 / 500 is 0.2%). And if you hold 6% of Apple vs 0.2% of Apple, obviously your return for the next 5 or 10 years could be quite different.

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Most of the funds you listed passively track the S&P 500 or use it as their benchmark, except for QQQ, which tracks the NASDAQ.

As a result, the top holdings are a direct reflection of the benchmark's top holdings. There's little to no discretion for portfolio managers to sell the winners, buy the losers. Their mandate is to achieve the fund's stated objectives, which are described in the prospectus.

The S&P 500 is a cap-weighted index tracking the 500 largest US stocks (by market cap), as described in the index methodology.

So, is it true that a fund that has an inception date of 2011 will be different from one that has an inception of today, or in 2000 or 1990?

The number of shares depends on the AUM (assets under management) but the weights should be roughly the same regardless of the inception date.

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The index that the fund uses as a recipe to determine what to invest in, and the proportions of those investments, changes over time.

When the index changes, a fund will add or subtract investments to match the makeup of the index. It isn't about selling winners or losers, it is about matching the recipe.

A very small fund will have trouble exactly matching the index. Remember the S&P 500 has 500 companies. Bigger funds will essentially match the index.

When the index changes so will the fund.

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    Nite that there are cases where a large fund cannot match the index's official mix exactly because there simply aren't enough shares/bonds immediately available on the market to do so. In those cases, an equivalent may be used to fill the gap. This is part of why the prospectus always says the fund attempts to track the results of the index, or some such wording.
    – keshlam
    Aug 3, 2023 at 12:27
  • I think the simple answer then is: it doesn't matter if the fund has an inception date of 2000 or 2010 or 2023, because it will buy more of Apple and buy less of other stocks, just strictly according to the S&P500 index. So as a result, after you buy, it just follows the curve of the S&P500 index, no matter it has inception date of 2000 or 2023. The S&P500 index will have more weight in stock that has increased a lot over the years. This is a property of the S&P500 index (or QQQ) Aug 3, 2023 at 12:47
  • @StefanieGauss If the fund is actually replicating the index, then yes (not all of them do). As keshlam mentioned, some will use derivatives or other instruments to replicate the returns of the index as best it can without having to hold odd lots of all S&P 500 companies.
    – D Stanley
    Aug 3, 2023 at 13:58

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