Hacker News new | ask | show | jobs
by aninhumer 3769 days ago
Surely Vanguard still need to make large trades whenever the make-up of the indices change?

When the (e.g.) 500th and 501st largest companies swap places, don't they need to sell one and buy the other to keep tracking a 500 share index?
2 comments
jonknee 3769 days ago
Yes, rebalancing days involve some volatility.

The way these index ETFs work though is that broker dealers can trade a basket of securities matching the index for a share of the ETF (and vice versa). Because of this price mismatches get fixed very quickly. S&P announces also changes ahead of time so while there is initial price movement it's not all instantaneous.

link
baking 3769 days ago
The funds in the OP were Total Market Funds, not index funds.
link