How does an index funds like Schwab® S&P 500 Index Fund (SWPPX) deal with S&P500 adding new companies and removing old companies that don’t preform well?
What happens to someone holding a SWPPX fund? Does the increase or decrease in the index make someone holding SWPPX fund pay more to match the index or receive money back?
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In: Economics
If it’s an index fund, it mirrors the S&P 500. When the stock market index updates its list of companies (done quarterly), then index funds re-balance their portfolio holdings, too.
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