Which index?

[Xan]

Typically I use the S&P 500, via VOO or IVV, for my stock portion.  In my HSA, I tried to mix it up, and am using the Russell 1000 via IWB.

The Russell 1000 seems to constantly underperform the S&P 500.  Should I switch my IWB for IVV?  Or would I be doing that just as the Russell 1000 starts outperforming?  Is there any particular reason one index would be better than the other?

[craigr]

Russell used to announce ahead of time what they were changing in the index so people could front-run and drive up the new stock price before being bought by the index. This was a big problem for the Russell 2000 small cap index. I don't know if they still do that or not, but you may want to look into it. Because of that I generally prefer the S&P version of the small cap index.

However the Russell 1000 is basically a large cap index with a good amount of mid-cap mixed in so this is less of a problem. If mid-cap is having a hard year then the index may lag the S&P 500 a little. But it shouldn't be much. Then again, if mid-cap is doing well then it may beat the S&P 500 by a little.

Long-term, it probably won't matter much as each year a different market segment does better/worse than others. I generally prefer more broadly diversified funds if given the choice. Flip a coin.

[Xan]

Thanks, Craig.  I'll check into whether the advance hand-tipping is a significant problem, but I'll probably just hang onto my IWB.  It's really quite a small portion of my overall savings anyway...  It just bothers me to see my HSA investment page, which excludes cash (that cash is elsewhere), consistently lose to my normal investment page, which includes cash.

I'm sure if I were to switch, the next 12 months would be fantastic for IWB.  :-)

[craigr]

I'm sure if I were to switch, the next 12 months would be fantastic for IWB.  :-)

Yeah, that's usually how this stuff works!