Questions tagged [index-fund]

to be used for any questions related to Index funds. The question should clearly state the Index in question [Nasdaq,LSE] or the fund house in question. If the question is generic with the intention to understand how the funds work, then a specific example should be quoted to get a better answer.

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73 views

Why do Vanguard retirement funds contain “Investor” Shares instead of “Admiral” Shares? [closed]

For example, Vanguard Target Retirement 2050 Fund (VFIFX) has an expense ratio of 0.15% (0.14695% to be more precise, according to the table below) and contains (ER = expense ratio): Fund Name ...
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4answers
250 views

Can it hypothetically happen that s&p 500 falls to its early 1990s level? Risks of long-term investment [closed]

Many people advise that one should invest money in indexes like the S&P 500 because they always grow in the long term. Is it possible that the S&P 500 could fall to its early 1990s level? ...
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2answers
2k views

Why is the expense ratio of an index fund sometimes higher than its equivalent ETF?

Vanguard Total Stock Market Index Fund Investor Shares (VTSMX)'s expense ratio is 0.14% whereas VTI, its equivalent ETF, has an expense ratio of 0.03%. Why is the expense ratio of an index fund ...
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11 views

How to properly compare the performance of a domestic index fund and an international index fund domiciled in the U.S?

For example, when comparing the performance of IVV (which tracks the S&P500), against the performance of the FTSE Canada RIC Capped Index (which tracks mid and large cap Canadian stocks), the S&...
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4answers
213 views

Why contribute monthly to an IRA rather than a brokerage account?

Hypothetically, if I had a long term investment in mind (let's use FNCMX) that I believed would perform well enough annually to allow me to retire at an early age, (call it 40 years old) what ...
4
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1answer
150 views

Why did this index fund jump almost 20,000% in 2017?

I am looking at Vanguard Pacific ex-Japan Stock Index Fund GBP Dist (0P0000KM1Z.L) on Yahoo Finance. Between 2017-12-24 and 2017-12-31 it jumped from £200 to £20,376. What would have caused such a ...
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9answers
5k views

Is it wise to keep some savings in a cash account to protect against a long term market crash?

My wife and I have half our savings in a low risk diversified account (WealthFront - mostly bonds, some stocks). We have the other half in a high interest cash savings account (0.35% interest). Our ...
2
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1answer
75 views

Is there a study on profitability of broadly diversified indexed portfolios using dollar-cost averaging?

This topic has been discussed a lot (see e.g. Why isn't everybody rich?, What if You Only Invested at Market Peaks? and Stock market long term risk). There seems to be the conclusion that investing in ...
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1answer
86 views

How can one lose money with VTI? [duplicate]

I am 26 and beginning to learn about investing. I currently have no investments other than some schemes through my employer, which I've already maxed-out. I've read that VTI is a long-term, low-risk ...
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2answers
139 views

Investing in index fund vs. investing to large-cap companies directly [duplicate]

I'm trying to understand the upsides/downsides of investing to an index fund vs. investing directly to stocks of some best-known and well-established large-cap companies. Every single article on ...
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1answer
35 views

Do income/distributing index funds (Vanguard specifically) invest their dividends until they are being paid out

Take those two for instance: https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-developed-world-ex-uk-equity-index-fund-gbp-inc/distributions https://www.vanguardinvestor.co.uk/investments/...
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1answer
96 views

Why are there no index tracker funds for frontier markets?

I am relatively new to investing (using Hargreaves Lansdown) and have built a portfolio of low cost index tracker funds. Given my age (27) I have opted for more risky assets (i.e. my portfolio is ...
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4answers
484 views

Is investing this lump sum in one of these two funds for the next 5 years a wise decision?

I'm going to be retiring from my career soon, and as well as receiving my pension, I have also qualified for a lump sum of just over £200,000, which I will receive around January 2021. I won't ...
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2answers
55 views

Is there a limit to the effectiveness of dollar-cost averaging when dividing up purchasing events? [duplicate]

If buying $12,000 worth of low-cost index funds, let's say that I buy $1000 per month for a year, instead of buying $12,000 all at once. From what I understand, this makes it more likely to improve ...
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2answers
66 views

If a sector is projected to well in the future, does it make sense to invest in an ETF of that sector?

For example solar energy and uranium seems to be projected to grow a lot in the future. Would it make sense to find index funds that track solar energy companies or uranium mining companies and invest ...
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1answer
90 views

Understanding performance of an index fund

I am trying to understand how to interpret the performance of an index fund. I have two views of the same TDB911 fund. The view in TD WebBroker (investing interface) shows that at the beginning of a ...
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2answers
86 views

Index ETF share cost and annual income

I want to figure out how ETF works and index ETF particularly. The aspect I can't find explanation for is the following: Investing into ETF means that I buy ETF stocks which price is based on market ...
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0answers
74 views

What's the implication of index fund dividend yields outperforming the 30-yr treasury?

On a year-on-year basis, dividend yields of index funds are greater than even the 30-year treasury coupons; the spread is even more pronounced on shorter-dated treasuries. For instance, a year's worth ...
2
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3answers
216 views

In what way do index funds “free-ride on the work done by active investors”?

I was reading Can You Really Game Index Funds?: One of my little stock-market obsessions is that index funds free-ride on the work done by active investors. Someone needs to make decisions that ...
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1answer
49 views

What's the relationship between SPDR S&P 500 ETF listings in different countries?

SPDR S&P 500 ETF Trust is listed on four stock exchanges: NYSE Arca — Symbol: SPY ISIN: US78462F1030 Currency: USD Listing date: 1993-01-22. (source) Singapore Exchange — Symbol: S27 ISIN: ...
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3answers
304 views

Why buy index funds when they are guaranteed to underperform their index?

I am frequently advised against picking individual stocks. The usual argument is that it is difficult for individual investors to beat stock market indexes. I don't understand this defeatist attitude. ...
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2answers
451 views

How can I lever up my index fund returns?

Suppose I am very confident that the 1 year and 5 year returns of an index-tracking ETF will be positive. How can I lever up the returns? For example, when the ETF increases by 5%, how can I achieve ...
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2answers
98 views

ETF of 2000 or more stocks but excludes stocks from the S&P 500?

I believe the S&P 500 is overvalued and small-cap stocks are less overvalued. So I would like to buy market index (like 2000 or 5000 companies) but without the S&P 500 companies. Are there ...
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1answer
131 views

Do all major indexes make sense for regular passive investment?

There are articles that say "buying" an index is a very good approach to investment, that beats most of the active funds. But, looking at the value of FTSE 100 for the past 20 years, it has ...
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1answer
48 views

Index Options + Options calculator [closed]

I noticed that even though SPX and SPY track the S&P Index (I realize latter is an ETF and 10x lower), the options prices for a particular chain that I observed today are not exact. They're ...
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4answers
3k views

Why don't index ETFs use leverage to offset their fees and eliminate tracking errors?

If a hypothetical stock index returns 100%, an ETF tracking the index might only return 99% because of ETF fees. This introduces tracking errors. Why don't index ETFs use leverage to offset the fees ...
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1answer
136 views

Why don't accumulation index funds (dividends are reinvested) raise more than the indexes they track?

Let's suppose a fund is tracking an index A, and let's suppose that it does it with 100% of accuracy. Therefore, given a particular period of time, the value of the fund should fall and rise exactly ...
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1answer
181 views

How do I invest in an index fund in EU? (or UK)

I have almost €70,000.- saved and after reading about index funds, I got very curious. I am a Spanish citizen living in the UK, and I assume there are some tax implications that I am completely ...
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1answer
171 views

How can I buy an ETF on Stock Exchange of Hong Kong as an investor in the USA? [closed]

I want to buy shares in 9169.HK Vanguard Total China Index ETF in USD. Their How To Invest page says "You can buy Vanguard ETFs through a brokerage firm during normal trading hours." But ...
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1answer
62 views

ETFs/Index Fund vs Superannuation

newbie here. My understanding says index fund and superannuation products are both funds that invest in stocks, commodities, bonds etc etc For Index funds, an investor gets units for regular ...
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1answer
80 views

I invested in a leveraged (x3) ETF but it does not grow as the underlying index. What went wrong? [duplicate]

I invested in Ayalon Extreme S&P 500 which is leveraged S&P. But its graphic does not follow the graphic of S&P. This is S&P which recently improved historic maximum: And this is the ...
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2answers
124 views

How is a new index fund created?

When a new index fund is created, how does it go from a concept to product? Where does the money come from to buy the initial investments that are needed for the fund to have its advertised ...
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2answers
332 views

QQQ vs. VOO in the long term. Which one is better ceteris paribus?

Look at the charts of QQQ and VOO. Obviously QQQ beats VOO. Expense ratio: VOO is 0.03% and QQQ is 0.2% Assuming QQQ will keep beating VOO within the next 30 years, does it make sense to pay 0.2% to ...
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2answers
132 views

Index fund question regarding Vanguard 500 Index Fund Admiral Shares - compound interest

I created an account with TDAmeritrade and started investing in VFIAX(Vanguard 500 Index Fund Admiral Shares) three years ago. At the time, I thought that I am investing in an index fund. However I ...
3
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1answer
83 views

What is the difference between investing in index fund on their website over your existing bank?

I want to start investing in index fund S&P500, specifically VFIAX from Vanguard. I went to their website and started creating an account, and then it occurred to me....maybe my bank, Chase ...
0
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4answers
270 views

If everyone expects index funds to increase in value in the future, wouldn't future returns be zero? [duplicate]

Suppose everyone expects Apple to increase its earnings by 20% next year. Due to the general expectation, the current stock price will incorporate this information. For example, if subsequently Apple ...
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10answers
9k views

Why do people claim that it's hard to outperform the S&P 500? It has only increased in value by ~1.5x in the past 5 years

Whereas companies like Google, Facebook, Netflix, Amazon, Apple have all increased anywhere from 3x-6x in value in the past 5 years. If you just stuck with those companies, you would have easily ...
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3answers
59 views

Changing funds in Roth IRA - Tax implications?

I have the following funds in a Roth IRA in a Fidelity account, and am determining if it is worth switching funds for a few of them. I mainly picked these because they have low expense ratios. I'm in ...
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1answer
54 views

Is there a criterion for the different % allocation values in ETF or funds diversified portfolios?

This question does a good job covering the basics of asset allocation. My question concerns the asset allocation of stocks, so we leave the bonds out of the question. All the recommended portfolios ...
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1answer
133 views

What are the pros & cons of investing in multiple funds?

I invest in a large 'ethical' fund, that manages around £1b of investments. Now, I make a small monthly contribution to this fund via a Stocks & Shares ISA. Obviously a fund is already spread ...
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2answers
123 views

How can I make most of the profit earned from ETF which I invest every month?

I've been regularly investing in a ETF every month for an year, for the same amount. Now that the fund is at it's peak, I'm not sure what should I do, stay invested for long term or sell it and re-...
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1answer
130 views

Questions on Index fund dividends

I wanted to ask a few questions regarding Index funds and its dividends. The questions are the following: If I decided to invest 10k into an Index fund and contribute monthly around 100-200 and ...
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2answers
191 views

For a risk-averse investor, is it ever justifiable to invest in real estate over an index fund?

Let's say I have a chunk of cash sufficient to cover a 50% down payment on an average house (£600k). Or, buy an inexpensive house outright. Let's also say I must use the money for real estate—I cannot ...
3
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1answer
245 views

Understanding how an ETF works

I am trying to fully understand how an ETF works. For the sake of simplicity, let us restrict ourselves to physical replica ETFs. Let us suppose that an ETF follows an index which tracks three stocks:...
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0answers
45 views

How a Gross Total Return ETF or Net Total Return ETF can be marked DIST

From the definition I've found about net and Gross Total Return indexes: A Net Return Index includes reinvesting dividends after withholding tax A Gross Return Index includes reinvesting dividends ...
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0answers
59 views

How can I obtain country weights for the MSCI world?

I would like to build a portfolio from MSCI (or other index suppliers') market capitalization indices using ETFs. The portfolio should follow the relative size of the gross domestic product as closely ...
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2answers
1k views

Income vs growth securities in a downturn

It's generally accepted that "income (dividends) and growth (capital gains) are perfect substitutes (tax and transaction costs aside)". i.e. "In financial theory, there is no reason for a difference ...
4
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2answers
197 views

Price discovery and index funds bubble

I have read an article and watched a couple of videos about a possible index fund bubble. One of the arguments to justify this bubble is (if I have understood it correctly) that a very huge ...
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2answers
186 views

What would happen if an hypothetical index funds bubble crashes

There are some finance professionals that have warned about an index fund bubble: Index funds bubble I'm assuming that, at some point, index funds will get into a bubble and this bubble will ...
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2answers
65 views

Can I convert shares in an index ETF into shares of the index constituents?

Suppose I own many shares of the SPDR Dow Jones Industrial Average ETF Trust (NYSE Arca: DIA). How can I convert those shares in DIA into shares of the 30 components of the DJIA?

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