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by konaraddi 89 days ago
My understanding: It depends on what index the fund is tracking. QQQ tracks the Nasdaq-100 so QQQ is vulnerable. VT tracks the FTSE Global All Cap Index so VT is not directly affected by Nasdaq’s choices but is still exposed to some extent because spacex is likely going to be in the aforementioned FTSE index, Nasdaq’s actions impact spacex’s market cap, and thus Nasdaq’s actions impact spacex’s position in the aforementioned FTSE index which in turn affects VT’s composition (to a smaller extent than QQQ’s).

EDIT: to be clear the above are just examples with two funds (QQQ and VT)
2 comments
mpercival531 89 days ago
FTSE Russell is proposing changes similar to Nasdaq, with the consultation ending 18 March.
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the__alchemist 89 days ago
VIFAX?
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konaraddi 89 days ago
I think it’d be a rinse and repeat of the line of thinking for VT but more exposure than VT.

From VIFAX fund’s description on vanguard:

> The fund offers exposure to 500 of the largest U.S. companies

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krackers 89 days ago
Based on the comment from [1] it seems like the issue with nasdaq is that anyone tracking it is contractually obligated to include spacex? What about for other funds? VIFAX description says

>The Global Equity Index Management team applies disciplined portfolio construction and efficient trading techniques designed to help minimize tracking error and maintain close alignment with benchmark characteristics [of S&P 500].

So given that this only affects NASDAQ i'm guessing they aren't affected? And even if S&p 500 started to play the same games, why can't their supposedly disciplined "Global Equity Index Management team" simply opt not to play along with these shenanigans? Or if they simply do mechanically track the s&p 500, what exactly is the "management fee" paying for?

[1] https://news.ycombinator.com/item?id=47394355

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konaraddi 89 days ago
There’s a lot to address here but in short: VFIAX is an index fund, it tracks the S&P500 index, it’s not actively managed, SpaceX will likely be in the S&P500, so my comment around VT applies to VFIAX (as far as the question of exposure is concerned) but to a greater extent than VT (see VT’s composition vs VFIAX’s composition).

Obligatory not financial advice, I’m not an expert, don’t make any financial decisions based on hacker news comments, etc

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