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Is it possible to buy all the stocks that make up e.g. the S&P500 and keep only that as an investment portfolio, rather than buying the corresponding index mutual fund (and paying fees in the process)?

I want to avoid paying any fee that I would incur by buying an index mutual fund. Unless those fees really help me in any way? I'm worried that in the long term, those fees are just a pure loss for me.

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    You'll pay a commission on each of those 500 purchases, and then what do you do when the composition changes? (When a company moves out of the S&P 500 and a new company comes in)? Hardly seems worth the trouble when the fees are so low. Commented Apr 9, 2017 at 1:19
  • @AndrewSavikas - thanks that's what I was looking for: it's too expensive to buy the positions individually, and even more so because the composition of the index changes regularly. How often does the S&P 500 changes its composition?
    – Frank
    Commented Apr 9, 2017 at 18:04
  • @Frank: The composition in terms of which companies are included doesn't vary hugely, but as JoeTaxpayer said the index is cap-weighted, and the market cap of the companies varies constantly so you have to decide how much to let it deviate from your holdings. In practice you're likely to spend as much or more in fees trying to do it yourself.
    – BrenBarn
    Commented Apr 10, 2017 at 1:01

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The S&P is cap-weighted. So it's not as simple as buying 1 share of each of 500 stocks. (If it were, getting started might be doable, although adding to your position would take time and another large unit of money.)

Can you do it? Sure? Do you have enough money to actually do it? I don't know. I'm happy to pay my .02-.03% to not worry about such things.

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  • Thanks - that's the answer I was looking for. Do you mean also that for an index fund, fees should be in the range .02-.03%? I've found some with fees like .4 %. Too much?
    – Frank
    Commented Apr 9, 2017 at 18:06
  • In my opinion, .05% is the upper limit. 1% over 20 years. .4% is still lower than most, but adds up over time. Commented Apr 9, 2017 at 18:09
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    @Frank genuinely curious, where are you finding S&P500 index funds with expense ratios of 0.4%?
    – Koen vd H
    Commented Apr 10, 2017 at 4:03
  • I think so, but I would need to double check - that was with Fidelity.
    – Frank
    Commented Apr 10, 2017 at 15:42
  • My bad - FUSEX is only 0.09%.
    – Frank
    Commented Apr 10, 2017 at 15:45

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