Investing in index funds

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Anonymous User
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Investing in index funds

Post by Anonymous User » Mon Jun 07, 2021 11:06 am

My firm requires that employees who invest in stocks get their trades approved by the firm before acting on them for insider trading concerns.

I’m thinking that general index funds like S&P 500 are pretty safe from insider trading concerns and probably easy to get cleared regardless of our client list.

But I’m wondering how firms (and SEC) generally view industry-specific index funds like index for pharma, tech, auto, etc.

They seem to be in between general market index and individual company stocks, so it looks like they could lean either way.

Anonymous User
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Re: Investing in index funds

Post by Anonymous User » Mon Jun 07, 2021 11:37 am

Anonymous User wrote:
Mon Jun 07, 2021 11:06 am
My firm requires that employees who invest in stocks get their trades approved by the firm before acting on them for insider trading concerns.

I’m thinking that general index funds like S&P 500 are pretty safe from insider trading concerns and probably easy to get cleared regardless of our client list.

But I’m wondering how firms (and SEC) generally view industry-specific index funds like index for pharma, tech, auto, etc.

They seem to be in between general market index and individual company stocks, so it looks like they could lean either way.
My firm, and I believe many others, allow you to buy funds with 30 or more stocks included without firm approval. You shouldn't be having to get S&P500 ETFs cleared unless your firm is truly wild.

Anonymous User
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Re: Investing in index funds

Post by Anonymous User » Mon Jun 07, 2021 11:41 am

Anonymous User wrote:
Mon Jun 07, 2021 11:37 am
Anonymous User wrote:
Mon Jun 07, 2021 11:06 am
My firm requires that employees who invest in stocks get their trades approved by the firm before acting on them for insider trading concerns.

I’m thinking that general index funds like S&P 500 are pretty safe from insider trading concerns and probably easy to get cleared regardless of our client list.

But I’m wondering how firms (and SEC) generally view industry-specific index funds like index for pharma, tech, auto, etc.

They seem to be in between general market index and individual company stocks, so it looks like they could lean either way.
My firm, and I believe many others, allow you to buy funds with 30 or more stocks included without firm approval. You shouldn't be having to get S&P500 ETFs cleared unless your firm is truly wild.
Thanks, that was really helpful because I hadn’t considered the number of stocks included in the fund. I’ll ask my firm to be safe but that makes me feel a lot better lol

The Lsat Airbender

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Re: Investing in index funds

Post by The Lsat Airbender » Mon Jun 07, 2021 6:44 pm

Anonymous User wrote:
Mon Jun 07, 2021 11:06 am
But I’m wondering how firms (and SEC) generally view industry-specific index funds like index for pharma, tech, auto, etc.
They can raise legitimate insider-trading concerns and are generally shitty products to boot. You're paying a higher expense ratio to be less diversified. Just buy VT or something.

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nealric

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Re: Investing in index funds

Post by nealric » Tue Jun 08, 2021 12:05 pm

I can't personally think of a good reason to invest in sector index funds. Just put it into VTI and not worry about it.

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Anonymous User
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Re: Investing in index funds

Post by Anonymous User » Wed Jun 09, 2021 10:22 am

nealric wrote:
Tue Jun 08, 2021 12:05 pm
I can't personally think of a good reason to invest in sector index funds. Just put it into VTI and not worry about it.
I didn’t realize they’re considered to be unadvisable! Thanks for the heads-up.

jotarokujo

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Re: Investing in index funds

Post by jotarokujo » Wed Jun 09, 2021 2:32 pm

nealric wrote:
Tue Jun 08, 2021 12:05 pm
I can't personally think of a good reason to invest in sector index funds. Just put it into VTI and not worry about it.
VT if you really want to turn off the brain

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nealric

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Re: Investing in index funds

Post by nealric » Wed Jun 09, 2021 5:40 pm

jotarokujo wrote:
Wed Jun 09, 2021 2:32 pm
nealric wrote:
Tue Jun 08, 2021 12:05 pm
I can't personally think of a good reason to invest in sector index funds. Just put it into VTI and not worry about it.
VT if you really want to turn off the brain
The international aspect of VT is a bit debatable. 8/10 of its largest holdings are U.S. anyways. But it works fine too.

eastcoast_iub

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Re: Investing in index funds

Post by eastcoast_iub » Wed Jun 09, 2021 8:58 pm

nealric wrote:
Tue Jun 08, 2021 12:05 pm
I can't personally think of a good reason to invest in sector index funds. Just put it into VTI and not worry about it.
Please put some thought into your investments before acting on this generic lame advice that is repeated ad nauseum on this forum. Doing some quick homework online will reveal that there a wide array of ETFs out there that can help you build a more diverse portfolio with better long-term potential.

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The Lsat Airbender

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Re: Investing in index funds

Post by The Lsat Airbender » Thu Jun 10, 2021 3:14 am

eastcoast_iub wrote:
Wed Jun 09, 2021 8:58 pm
nealric wrote:
Tue Jun 08, 2021 12:05 pm
I can't personally think of a good reason to invest in sector index funds. Just put it into VTI and not worry about it.
Please put some thought into your investments before acting on this generic lame advice that is repeated ad nauseum on this forum. Doing some quick homework online will reveal that there a wide array of ETFs out there that can help you build a more diverse portfolio with better long-term potential.
Any given basket of sector-specific (or other equity) ETFs is by definition less diverse than a total-market index, so that's obviously dogshit advice. And "better long-term potential" is meaningless unless you elaborate on what you mean by that.

Sackboy

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Re: Investing in index funds

Post by Sackboy » Thu Jun 10, 2021 3:44 am

The Lsat Airbender wrote:
Thu Jun 10, 2021 3:14 am
eastcoast_iub wrote:
Wed Jun 09, 2021 8:58 pm
Please put some thought into your investments before acting on this generic lame advice that is repeated ad nauseum on this forum. Doing some quick homework online will reveal that there a wide array of ETFs out there that can help you build a more diverse portfolio with better long-term potential.
Any given basket of sector-specific (or other equity) ETFs is by definition less diverse than a total-market index, so that's obviously dogshit advice. And "better long-term potential" is meaningless unless you elaborate on what you mean by that.
Guy probably has some of those Dave Ramsey 15% annual return ETFs.

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nealric

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Re: Investing in index funds

Post by nealric » Thu Jun 10, 2021 10:13 am

eastcoast_iub wrote:
Wed Jun 09, 2021 8:58 pm
nealric wrote:
Tue Jun 08, 2021 12:05 pm
I can't personally think of a good reason to invest in sector index funds. Just put it into VTI and not worry about it.
Please put some thought into your investments before acting on this generic lame advice that is repeated ad nauseum on this forum. Doing some quick homework online will reveal that there a wide array of ETFs out there that can help you build a more diverse portfolio with better long-term potential.
It’s “generic” advice because it’s good advice. Even Warren Buffet tells individuals they should stick to broad market index funds.

Anything other than a broad market fund is by definition less diverse. It’s also almost certainly less of a long-term strategy due to sector rotations over time.

Can you beat a broad market fund? Maybe if you are lucky. You are statistically more likely to trail it. A big benefit of biglaw income is you don’t need to beat the market to accumulate a hefty nest egg.

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UnfrozenCaveman

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Re: Investing in index funds

Post by UnfrozenCaveman » Fri Jun 11, 2021 10:03 am

Just buy VXX.

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