S&P 500 index and funds difference

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Tommy
Posts: 129
Joined: Mon Mar 07, 2016 11:47 pm

S&P 500 index and funds difference

Post by Tommy » Wed Sep 07, 2016 10:10 pm

Today S&P 500 index was down
2,186.16
Day Change
0.32 | -0.01 %
However, funds that follow this index up :)
Fidelity® 500 Index Premium FUSVX
NAV
$ 77.19
1-Day Total Return
0.01 %
Vanguard 500 Index Admiral VFIAX
NAV
$ 202.54
1-Day Total Return
0.01%
Looks kinda strange to me, fund performs better than index...

Teague
Posts: 1141
Joined: Wed Nov 04, 2015 6:15 pm

Re: S&P 500 index and funds difference

Post by Teague » Wed Sep 07, 2016 11:00 pm

I believe this is called tracking error. I think it is known to happen with index funds. I suspect it often evens out eventually. I'm not sure I'd worry too much about a 1 day difference of one or two ten-thousandths of whatever amount I had invested.
Semper Augustus

camaro327
Posts: 250
Joined: Fri Dec 21, 2012 11:04 am

Re: S&P 500 index and funds difference

Post by camaro327 » Thu Sep 08, 2016 6:09 am

It could be the dividends that the funds pay out. The actual index doesn't pay the dividend.

Check back after a dividend payment and see if the funds continue to depart from the index over 30 days or so.

Jags4186
Posts: 2457
Joined: Wed Jun 18, 2014 7:12 pm

Re: S&P 500 index and funds difference

Post by Jags4186 » Thu Sep 08, 2016 6:26 am

All of the above. You'll see times when the index is up .5% and the index fund rises .49%. It most definitely will even out and you will underperform approximately by the annual fee.

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JoMoney
Posts: 5823
Joined: Tue Jul 23, 2013 5:31 am

Re: S&P 500 index and funds difference

Post by JoMoney » Thu Sep 08, 2016 6:33 am

Over the past decade +, VFIAX only under-performed the index by .01% annualized, despite the .05% Expense Ratio.
The institutional class fund VIIIX , which only has a .02% ER, actually beat the index by .02% annualized.
(Morningstar Growth Chart)
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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