I personally think this one is a no-brainer. I HIGHLY recommend you compare RSP with other large cap ETFs on Morningstar. I think you will be pleasantly surprised. However, the reality is RSP is more akin to a largish mid cap fund than a by the book large cap. Beta is higher than the S&P500 TR but RSP also actually generates real alpha.dualstow wrote:Nice!Kbg wrote: ETF Symbol: RSP
S&P 500's Dirty Little Secret (Joshua Kennon)
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Re: S&P 500’s Dirty Little Secret (Joshua Kennon)
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Re: S&P 500’s Dirty Little Secret (Joshua Kennon)
Interesting though I think the ER is a little on the steep side for an ETF.Kbg wrote: ETF Symbol: RSP
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Re: S&P 500’s Dirty Little Secret (Joshua Kennon)
Just curious...how does it compare against a revenue-weighted S&P 500 fund? We have results for RWL from 2008 on and results for the underlying index for it from 1979 on...do you know of any equally weighted S&P 500 funds that predate both the Invesco Equal Weighted S&P 500 Fund (open ended mutual fund; started in late 1980s and thus predates RSP by over a decade; to get a fair comparison one would have to use RSp expense ratio since the abovementioned Invesco fund mentioned had a horribly high expense ratio during its early years)....I know CRSP has an equal weight index dating back to 1926 but they charge for it....I could've swore I saw an annual returns chart for equal weight S&P back to 1970 on the Motley Fool Mechanical Investing boards a while back.Kbg wrote:I personally think this one is a no-brainer. I HIGHLY recommend you compare RSP with other large cap ETFs on Morningstar. I think you will be pleasantly surprised. However, the reality is RSP is more akin to a largish mid cap fund than a by the book large cap. Beta is higher than the S&P500 TR but RSP also actually generates real alpha.dualstow wrote:Nice!Kbg wrote: ETF Symbol: RSP
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Re: S&P 500’s Dirty Little Secret (Joshua Kennon)
I was listening to a random walk down wall street. They mentioned that 50 stocks provided good diversification. If you hold 50 stocks in one single industry that benefit is instantly reduced with (at least) 60%.sophie wrote: Thanks dualstow! I wonder about whether there is a piece of advice in here worth considering:
Buying 500 individual stocks is not a realistic option for most of us, but one possibility is to split the stock portion between a total stock market index fund and a collection of individually held stocks chosen from the index. Harry Browne advised holding 20 stocks because he considered that to be enough risk mitigation.In nearly every case, under nearly every valuation scenario, when you stretch the performance period out to 25 years or more, a basket of a given index bought and held on the date it was acquired, with absolutely zero subsequent changes, ended up outperforming the index itself. Activity is frequently the mortal enemy of good returns.
Re: S&P 500’s Dirty Little Secret (Joshua Kennon)
I always enjoy posts from these guys. Their blog is definitely worth a read. (Alpha Architect's)D1984 wrote:Just curious...how does it compare against a revenue-weighted S&P 500 fund? We have results for RWL from 2008 on and results for the underlying index for it from 1979 on...do you know of any equally weighted S&P 500 funds that predate both the Invesco Equal Weighted S&P 500 Fund (open ended mutual fund; started in late 1980s and thus predates RSP by over a decade; to get a fair comparison one would have to use RSp expense ratio since the abovementioned Invesco fund mentioned had a horribly high expense ratio during its early years)....I know CRSP has an equal weight index dating back to 1926 but they charge for it....I could've swore I saw an annual returns chart for equal weight S&P back to 1970 on the Motley Fool Mechanical Investing boards a while back.Kbg wrote:I personally think this one is a no-brainer. I HIGHLY recommend you compare RSP with other large cap ETFs on Morningstar. I think you will be pleasantly surprised. However, the reality is RSP is more akin to a largish mid cap fund than a by the book large cap. Beta is higher than the S&P500 TR but RSP also actually generates real alpha.dualstow wrote: Nice!
http://seekingalpha.com/article/3118616 ... etfs?ifp=0
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Re: S&P 500’s Dirty Little Secret (Joshua Kennon)
RSP is small cap/value exposure. Read my thread on equalizing the market cap exposure of the PP. It only takes three or four free ETF's at Schwab.Kbg wrote: I personally think this one is a no-brainer. I HIGHLY recommend you compare RSP with other large cap ETFs on Morningstar. I think you will be pleasantly surprised. However, the reality is RSP is more akin to a largish mid cap fund than a by the book large cap. Beta is higher than the S&P500 TR but RSP also actually generates real alpha.
As to the article:
The original S&P had nothing to do with the "biggest, most important market capitalization-weighted firms". It wasn't even large cap.
Float-adjusted is actually a benefit. You want to be buying more shares as they go down in price to help offset the market cap overweighting (buying more shares as they go up in price) which drags down portfolio returns.
I'm scratching my head at the exclusion of foreign and inclusion of mortgage REITs. But keep in mind that the S&P 500 is run by a Politiburo at S&P -- it is not a quantitative selection process. Additions and deletions are subjective and biased. The Dow is even worse.
Last edited by MachineGhost on Fri May 15, 2015 9:49 pm, edited 1 time in total.
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Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!