“I want ETFs and low fees” -> https://www.bogleheads.org, there are various articles describing which funds to pick. (I’m thinking by “indexing service” you mean index fund?) Bogle was the founder of Vanguard and argued that low fees were better than active management; the “bogleheads” are the community that follow that advice.
An index fund is a fund that owns a basket of stocks which are weighted by their weight in index. Like, if you have an S&P500 index fund, then for every $1,000 you put in the index, you own, say, $13.30 of WMT, because WMT has a weight of 1.33%.
But with some exceptions, you will mostly own stocks in integer amounts. You own one share or zero. That doesn’t give you $13.30 of WMT, that gives you $96.98 of WMT or $0.00 of WMT. Index funds work because the funds are large enough—a fund with $10 million in assets can buy 1,371 shares of WMT at $96.98 for $132,959.58 which is close enough. And then the index fund has to periodically rebalance—the share price of WMT changes, the weighting of WMT in the S&P500 changes, and the fund then has to buy or sell shares of WMT.
You could come up with a way to do something like having your own index fund, but it would involve partial ownership of shares, and pooling your assets with people who disagree with you about the way to allocate assets, which makes things more complicated and probably more expensive.
My personal take on this is that these more complicated schemes can often end with retail traders getting the short end of the stick. That’s why low-fee ETFs have been so successful.
I think if you want a weighting other than what the index fund gives you, then there are ways to do that—maybe these involve some fees, but c’est la vie. You can buy “tilted” ETFs, you can buy exposure to specific stocks or funds, you can hedge exposure to specific stocks or funds. But you are probably going to have a hard time making your own basket with a lot of stocks in it. Retail trading just does not get access to the same strategies that wall street has.
Or you just buy the largest stock in each one of the 7 largest sectors and it pretty much correlates to the sp500. ETF have some nasty hidden fees related to the etf price being more expensive than the basket when you buy and less than the basket when you sell.
Sector
Company 1
Company 2
Information Technology
Microsoft (MSFT)
Apple (AAPL)
Financials
JPMorgan Chase (JPM)
Berkshire Hathaway (BRK.B)
Health Care
Johnson & Johnson (JNJ)
UnitedHealth Group (UNH)
Consumer Discretionary
Amazon (AMZN)
Tesla (TSLA)
Communication Services
Alphabet (GOOGL)
Meta (META)
Industrials
Boeing (BA)
Caterpillar (CAT)
Energy
ExxonMobil (XOM)
Chevron (CVX)
I'm sure I'm missing something but does direct indexing really solve anything for you in this instance?
If you're in any of the main ETFs or index funds you're getting really cheap access to what's basically the same list of stocks you'd get with direct indexing. If you're trying to get equal-weighting of an index there's ETFs for that too, but that would mean you're betting more on companies without the ability to benefit from significant hegemony and the madding crowd of index fund influx, which seems to be where most of the growth comes from these days.
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