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Strategies & Market Trends : Shorting SPY for fun and profit.
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To: studdog who wrote ()10/6/1999 8:17:00 AM
From: Clifford T. Tanaka  Read Replies (2) of 346
 
I have a question regarding using SPY to invest in the S&P500 rather than an index fund. The way I see it, the difference between SPY and an index fund is rather subtle, but might be significant. SPY is priced by the market to be 1/10 of the S&P500 index, while an index fund is priced by it's NAV (assets/shares outstanding). The index fund will always slightly underperform the actual index due to management fees. However, I'm under the impression that the management fees of the SPY trust fund (0.18% annual) is not passed on to investors if the market prices SPY directly based on the index. In other words the market doesn't care that "NAV" of the SPY trust isn't really quite 1/10 the index. In that case, screw the index mutual funds. Comments? Thanks in advance.
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