Comment by lovich
13 hours ago
But you think they’ll adopt some of these proposals that are in the benefit of these companies IPOing at the expense of large funds?
13 hours ago
But you think they’ll adopt some of these proposals that are in the benefit of these companies IPOing at the expense of large funds?
I don't understand what you wrote. It sounds like you are saying this is a zero-sum game of winners and losers -- SpaceX "wins" and the tracking funds "lose". The ETFs and mutual funds that track these indices don't care what stocks are added or removed. They have one job: To track the index as closely as possible with the lowest cost.
Not true, they collectively lose investors if they become less attractive. Probably not an overnight thing, but if people are told that index funds are not attractive anymore then increasingly fewer people will put their money in them vs a hand-picked portfolio.
But also to follow the existing rules set in place to protect passive investors, no?
SpaceX will not "win". Its current investors will win by selling at IPO and in following months at inflated prices to unwilling buyers.
If the S&P adopt those rules would there be any index fund that is S&P without the new rules?
An index fund like the S&P500 is not the S&P500. It is stuck competing in a world of low margin pain.
I sincerely hope S&P and Nasdaq rollback the SpaceX-targeted changes, but unfortunately I seriously doubt it.
Dimensional funds have a type of index factor funds that roughly track these indices without strict adherence to S&Ps inclusion rules. That's the only one I'm aware of.
IZZ, or in other words fuck em.
> they’ll adopt some of these proposals that are in the benefit of these companies IPOing at the expense of large funds?
Yes. And I see the argument for it. It’s hard to claim you represent the market if trillions of dollars are outside it for no reason other than newness or capital-structure weirdness. (I agree with excluding unprofitable companies.)
Moving the goalposts of an index fund for one or 3 IPOs puts the reputation of S&P and Nasdaq in question. The comments in this thread make that clear.
> Moving the goalposts of an index fund for one or 3 IPOs puts the reputation of S&P and Nasdaq in question. The comments in this thread make that clear
These indices have lots of competition. NASDAQ 100 lost basically zero money when they made these changes. If S&P makes them, I'm doubtful anyone will react either.
When S&P was still taking public comment, I put the link on HN. It got like two upvotes. This isn't something materially care about as much as like to get angry about on the internet.
2 replies →
There's quite a bit of money in, say, the cannabis business; do they have any representation in indices of note?
You clearly have no clue of the marketcap of these cannibas companies.
The minimum marketcap for S&P 500 is ~23 Billion
The highest current marketcap of cannibas companiy is $3 Billion
What was the point of your comment saying
> S&P has not finalized a rule change yet.
If you were responding to someone saying the benchmark indexes were changing their own rules?
Like the actual intent of the comment and not just observing reality like someone saying the sky is blue.