No. of Recommendations: 1
I looked all over and couldn't find anything about the weightings. They sort of imply that it is cap weighted of the S&P500 stocks that you didn't exclude.
I wonder, couldn't you do essentially the same thing by buying VOO and shorting the stocks that you don't want?
I am not looking to run this myself, and personally stay away from shorting.
Maybe you don't like tobacco companies. Philip Morris (#38, weight 0.42%) and Altria (#104, weight 0.18%).
On a $10,000 account that's $42 of PM and $18 of MO.
That's silly. They are insignificantly small in the S&P 500. You are just making a feel-good empty statement.
I would not complicate our finances for $10K. No possible dollar amount of return premium on $10K would be worth buying large numbers of individual stocks and dealing with huge monthly statements with the trading volume.
For some people it matters. For example, our environmentalist son would like to exclude petroleum products. Or, we were always very hesitant to buy the industry we worked in because our paycheck was dependent on this very cyclical industry and we didn't want the risk of our assets declining while our paycheck was lost. That was compounded when we both worked in the same industry, for a company that is no longer around. In addition, we had a ton of stock options in one particular stock, and tried to avoid buying more. Just sold the last batch of options, so no longer an issue for us, but would have been at an earlier time of our investing life.
I could see maybe taking the top 50 stocks (62% of the S&P500) or top 100 (74%) and excluding the rest. That's a lot of work, excluding all 450 or 400 stocks.
The bottom 300-400 stocks might as well not even be there.
You seem to be looking for a DIY Mechanical Investing screen. I am looking to have it done for me. There are limits to the number of industries and number of individual stocks you can avoid. This approach gives you some choice, not total choice. If you have to make too many changes to be pleased, then you need a different index to target or a different approach altogether.
I also like that while they are trying to target the return+ of the benchmark, they are not trying to exactly replicate the holdings. IF there is a turnover in the holdings of the benchmark, unlike the ETF they are not required to buy the now spiraling up in cost new entry and sell the plunging shares of the company exiting the index. This is a partially managed fund, at least at Schwab/Fidelity.
Definitely not for everyone.
IP
