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Fund Selection Methodology
- Understand the underlying index's creation, purpose, and holdings before investing in a fund.
- Consider index availability, fund sponsor, size, fees, and tax efficiency (ETFs for taxable accounts).
Broad vs. Total Market
- "Broad Market" funds may hold fewer stocks than "Total Market" funds, impacting returns.
- In 2021, large-cap outperformance led to broad market funds appearing superior due to this difference.
SPY vs. VOO
- SPY, a unit investment trust, underperforms VOO (Vanguard S&P 500 ETF) in bull markets due to dividend reinvestment differences.
- Conversely, SPY may outperform in down markets due to its cash allocation.