That ignores the actual issue here, which is the change in rules. Index funds already seek to own the entire market, and when most people chose these index funds there were rules about when newly listed stocks get purchased by the funds. And now those rules are being changed.
replyIndex funds generally try to match the performance of the index, but most are not required to hold the same companies as the index itself does. They typically do, but managers often have choices.
reply> Index funds already seek to own the entire market, [...]
replyNo, it depends on the index in question.
Yes, most index funds don't literally intend to own the entire market for any sufficiently broad interpretation of the word "entire."
replyBut the point is that we have notable index funds which are marketed to customers as having the intention to own segments of the market according to certain rules, and they are changing those rules with relatively short notice and for reasons that seem suspicious to many customers.
The problem is I'm already in a S&P500-tracking ETF, for a decently large amount of money. Selling it off would be a big taxable event for me, something I don't want to do.
replyCould you use a prediction market (or Spread Betting in the UK) to hedge against your ETF loosing money during the period? If the ETF lost value, the hedge would gain it back and vice versa. You wouldn't need to sell the ETF and you'd only be liable for tax on gains from the prediction.
replyWould you be taxed even if you put it straight into another fund? Genuine question.
replyYes, because when you sell it, you get cash and profit. Profit is taxable, in Germany they tax it with 25% + Solidarity Tax + Church Tax (if you are a member of a church).
After, you can go ahead and buy another fund, but in between you "shed" a significant amount of money.
replyDetails depends on jurisdiction, of course.
replyIn the US, you would likely also have to pay capital gains taxes for such a trade. (I think.)
In Singapore, in contrast, swapping between funds like this would not have any tax implications.
However they are literally changing the rules of what "the entire market" means to include those companies sooner that they would have been when people bought those indices.
replyIndex funds don't represent "the entire market" anyway. They are a diversified selection of stocks choosen according to some rules.
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