Investing in index funds is considered as one of the best investments one can make because it provides broad diversification across a collective of stocks. This allows for someone to minimize losses by spreading out an investment over multiple companies but only investing in one asset. In just a single trade you own tech stocks, consumer stocks, utilities, real estate, and more.
Warren Buffet made a one million dollar bet that an S&P 500 index fund would beat the returns of an actively managed hedge fund over ten years and he won that bet by a landslide. The goal is to provide global access to index funds without the fees.
The S&P 500 Index was selected because it is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The index accounts for 80% of the market value of the U.S. equities market. The S&P 500 is also float-weighted index, meaning company market capitalizations are adjusted by the number of shares available for public trading. Below are the 10 largest companies of the S&P 500 as of December 31, 2020:
The SPDR S&P 500 Trust ETF, also known as the SPY ETF, is one of the most well-known funds that tracks the S&P 500 Index. The SPY has generated an average annual return of just under 10% since inception. Over the past three years the SPY has generated an average return of 13.25%. The SPY is well diversified and allocates its fund into multiple sections, such as 27.86% information technology, 13.34% healthcare, 10.44% financial services, 10.97% communication services, 8.12% industrials, 6.09% consumer staples, 12.96% consumer discretionary, 2.70% utilities, and 2.44% real estate.
This is a great proposal, and more will be needed like it in the future for multi asset portfolios to be built. Imagine a L2 funds management solution running portfolios of equity / bonds / alternatives on Mirror. Yeah there is interest in tech stocks from the current batch of crypto investors, but the real trick will be capturing interest from the long term savings / pensions type markets. The scale is multiples of that interested in tech stocks. Just a thought, SPY is a great step forward, we really need to get it accepted.
We really need to get this through this time. This would make us much more attractive to passive Investors who value Diversification. I know I would probably increase my Investment in Mirror 10x with such a fund present.