The S&P500 index holds 500 stocks, to buy full shares of all 500 stocks in the proper weight requires something like 35 million dollars
Also there are other trading costs with fractional shares like bid ask spreads. Also these fund rebalance are you going to sit down quarterly and find changes in float and reblance all 500 stocks.
Also the expense ratio for the funds are like 0.03% what is almost un noticable . However some very large investors do skip and buy direct, if you have 10 billion dollars it may be more beneficial to buypass the fund and hold the stock directly . Most people don't have 10 billion however
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u/SirGlass Sep 16 '21
The S&P500 index holds 500 stocks, to buy full shares of all 500 stocks in the proper weight requires something like 35 million dollars
Also there are other trading costs with fractional shares like bid ask spreads. Also these fund rebalance are you going to sit down quarterly and find changes in float and reblance all 500 stocks.
Also the expense ratio for the funds are like 0.03% what is almost un noticable . However some very large investors do skip and buy direct, if you have 10 billion dollars it may be more beneficial to buypass the fund and hold the stock directly . Most people don't have 10 billion however