Are index trackers subject to insolvency risk?
The Financial Services Compensation Scheme says: Investments   FSCS provides protection if an authorised investment firm is unable to pay claims against it. For example: for loss arising from bad investment advice, poor investment management or misrepresentation; when an authorised investment firm goes out of business and cannot return investments or money. Investments covered include: stocks and shares; unit trusts; futures and options; personal pension plans and long-term investments such as mortgage endowments. An index-tracking fund provided by an authorised investment firm would seem to qualify in the cases where: The critical points here then are: I can't find anything easily to hand about FSCS on Blackrock's website, so I would imagine that you'd need to consult the documentation on your investment product to be sure.
"Beatrice does a good job of summarizing things.  Tracking the index yourself is expensive (transaction costs) and tedious (number of transactions, keeping up with the changes, etc.)  One of the points of using an index fund is to reduce your workload.  Diversification is another point, though that depends on the indexes that you decide to use.  That said, even with a relatively narrow index you diversify in that segment of the market. A point I'd like to add is that the management which occurs for an index fund is not exactly ""active.""  The decisions on which stocks to select are already made by the maintainers of the index.  Thus, the only management that has to occur involves the trades required to mimic the index." "My original answer contained a fundamental error: it turns out that it is not true that any exchange can create its own product to track any underlying index.  If the underlying index is copyrighted (such as the S&P indices, Russell indices, Dow Jones indices, etc.) then the exchange must enter into a licensing agreement (usually exclusive) with the copyright holder in order to use the index's formula (and name).  Without such a license the exchange would only be able to approximate the underlying index, and I don't think that happens very much (because how would you market such a product?). The CME offers several futures (and other derivatives) whose face value is equivalent to some multiple of the S&P500's value on the date when the product expires.  When such a product is actively traded, it may serve as a reasonable indicator of the ""market""'s expectation of the S&P500's future value. So, you could pay attention to the front month of the CME's S&P 500 Mini future, which trades from 17:00-16:00 Chicago time, Sunday night through Friday afternoon.  But remember that the prices quoted there are As another example, if you care about the Russell 2000 index, until 2017 the ICE Exchange happened to hold the license for its derivatives.  They traded from 20:00-17:30 New York time, Sunday night through Friday afternoon.  But in mid-2017 CME bought that license as well, so now you'll want to track it here. Moral: There's almost always some ""after hours"" product out there tracking whatever index you care about, but you may have to do some digging to find it, and it might not be all that useful for your specific purpose." "Oh please. Most of the unsecured creditors who get screwed in bankruptcy are large banks. They know the risk going in which is why unsecured lends at a high interest rate. Yes, trade creditors often do get screwed but it's a cost of doing business -- it's why a vendor needs to monitor its receivables and watch for signs of insolvency and adjust the terms of trade accordingly.  You should have made sure you were covered by brokerage insurance before handing money to a company like that. The ""I'm the little guy"" argument is just weak." Yes an index is by definition any arbitrary selection. In general, to measure performance there are 2 ways: By absolute return - meaning you want a positive return at all times ie. 10% is good. -1% is bad. By relative return - this means beating the benchmark. For example, if the benchmark returns -20% and your portfolio returns -10%, then it has delivered +10% relative returns as compared to the benchmark. Why would they do that? The data has value.  Bankruptcy isn't just shutting the doors, it's selling off the data.  I predict this will start a new firestorm around what happens to *your* data that you don't own.  People are about to realize that they're going to be fucked both ways. You can write industry loss warrants. This is the closest thing I’ve found since I’ve been interested in this side of the ILS trade. Hedge funds and asset managers can do this. From what I understand it’s you selling the risk.   Want to start a fund? 🤔 "Yes. S&P/ Case-Shiller real-estate indices are available, as a single national index as well as multiple regional geographic indices. These indices are updated on the last Tuesday of every month. According to the Case-Shiller Index Methodology documentation: Their purpose is to measure the average change in home prices in 20 major metropolitan areas... and three price tiers– low, middle and high. The regional indices use 3-month moving averages, published with a two-month lag. This helps offset delays due to ""clumping"" in the flow of sales price data from county deed recorders. It also assures sufficient sample sizes.  Regional Case-Shiller real-estate indices  * Source: Case-Shiller Real-estate Index FAQ. The S&P Case-Shiller webpage has links to historical studies and commentary by Yale University Professor Shiller. Housing Views posts news and analysis for the regional indices. Yes. The CME Group in Chicago runs a real-estate futures market. Regional S&P/ Case-Schiller index futures and options are   the first [security type] for managing U.S. housing risk. They    provide protection, or profit, in up or down markets. They extend to the   housing industry the same tools, for risk management and investment,    available for agriculture and finance. But would you want to invest? Probably not. This market has minimal activity. For the three markets, San Diego, Boston and Los Angeles on 28 November 2011, there was zero trading volume (prices unchanged), no trades settled, no open interest, see  far right, partially cut off in image below.  * Source: Futures and options activity[PDF] for all 20 regional indices.  I don't know the reason for this situation. A few guesses: Additional reference: CME spec's for index futures and options contracts." As an ordinary shareholder, yes you are protected from recourse by the debtors. The maximum amount you can lose is the amount you spent on the shares. The rules might change if you are an officer of the company and fraud is alleged, but ordinary stockholders are quite well protected. Why are you worried about this? An index will drop a company for several reasons:  A fund decides how close they want to mirror the index. Some do so exactly, others only approximate the index. Presumably you mean to ask what happens if State Street files chapter 7 bankruptcy, since not all bankruptcy proceedings end in liquidation.  SPY is a well known ticker, I can't imagine that there wouldn't be an eager bank willing to pay to pick up that ticker and immediately acquire all the assets related to it. The most likely scenario is that another bank would assume control of the ticker and assets, and the shares would continue trading as they always have. A less likely scenario is that no other financial institution wanted to acquire SPY, and the shares would be liquidated and the proceeds would go to the owners of shares of the ETF. Since the underlying assets are in companies that have actual value, the shares shouldn't trade at much of a discount prior to liquidation. Additionally, if there is a black swan event, there will probably be losses on the underlying assets, so it might even be helpful if the SPY fund was tied up in legal proceedings while everyone gets their heads straight in the market. You can obtain a stocklist if you file a lawsuit as a shareholder against the company demanding that you receive the list. It's called an inspection case. The company then has to go to Cede and/or the Depository Trust Company who then compiles the NOBO COBO list of beneficiary stockholders. SEC.gov gives you a very limited list of people who have had to file 13g or 13d or similar filings. These are large holders. To get the list of ALL stockholders you have to go through Cede. "Vanguard has a Vanguard FTSE Social Index Fund.  Their web page says ""Some individuals choose investments based on social and personal beliefs. For this type of investor, we have offered Vanguard FTSE Social Index Fund since 2000. This low-cost fund seeks to track a benchmark of large- and mid-capitalization stocks that have been screened for certain social, human rights, and environmental criteria. In addition to stock market volatility, one of the fund’s other key risks is that this socially conscious approach may produce returns that diverge from those of the broad market."" It looks like it would meet the qualifications you require, plus Vanguard funds usually have very low fees." "Yes, many hedge funds (for example) did not survive 2008-2009.  But hedge funds were failing both before and after that period, and other hedge funds thrived.  Those types of funds are particularly risky because they depend so much on leverage (i.e. on money that isn't actually theirs). More publically-visible funds (like those of the big-name index fund companies) tended not to close because they are not leveraged.  You say that ""a great many companies"" failed during the recession, but that's not actually true.  I can't think of more than a handful of publically-traded companies that went bankrupt.  So, since the vast majority of publically-traded companies stayed in business, their stocks kept some/most of their value, and the funds that owned those stocks stayed afloat. I personally did not see a single index fund that went out of business due to the recession." There are at least a couple of ways you could view this to my mind: Make an Excel spreadsheet and use the IRR function to compute the rate of return you are having based on money being added. Re-invested distributions in a mutual fund aren't really an additional investment as the Net Asset Value of the fund will drop by the amount of the distribution aside from market fluctuation. This is presuming you want a raw percentage that could be tricky to compare to other funds without doing more than a bit of work in a way. Look at what is the fund's returns compared to both the category and the index it is tracking. The tracking error is likely worth noting as some index funds could lag the index by a sizable margin and thus may not be that great. At the same time there may exist cases where an index fund isn't quite measuring up that well. The Small-Growth Indexing Anomaly would be the William Bernstein article from 2001 that has some facts and figures for this that may be useful. I have done this, and the reason is to make sure that I don't run out of money in my account to place the order if there is an unexpected upswing in price. Suppose I have $1000 in my account and I want to buy 10 shares of ABCD that are currently at $99.  If the price doesn't change, then I am all set, but if the price goes up to $101 then I don't have sufficient funds to make the purchase. By placing a limit order at $100 I can ensure that I have enough money to place the order. In general, it is a rather unlikely scenario that it could happen, but placing the limit order is easy to do and it gives me peace of mind. I don't know what you mean about bypassing the queue.