Back in November, Jack Bogle (father of Index Funds) warned that soon, Index Funds will own more than half the equity in the stock market [Link: http://money.com/money/5468239/jack-bogle-index-funds-problem/]
Setting aside the issues with large institutional investors controlling the voting rights for most companies, wouldn't it make common sense for Index Funds to ALWAYS trade at a higher value than their underlying assets because there is value in automatic diversification & market cap rebalancing? I suppose it's possible that the fees funds charge could cancel out or otherwise work against this effect, but I feel that in many cases, the value of indexing exceeds how much they cost.
Given how popular Index Funds and ETF's are right now, does this premium exist?
I may want to test this theory, but as an amateur not working in finance, I'm not really sure if its worth investigating, or how to do it. Is it possible to just track the difference between the market-cap of an ETF and the market value of all of the assets the ETF holds? Where is the best place to get that kind of data?
Submitted April 10, 2019 at 11:12AM by jloeb http://bit.ly/2Icb2ka
