Creating an index

[NW-Bound]

I recall that some years ago, a financial company allowed you to define your own basket of stocks, then buy it in small dollar amounts like a mutual fund. Wonder if it is still around.

 

[CaliforniaMan]

I just learned about AlphaDex. What I was thinking of creating might be considered an enhanced index.

https://www.ftportfolios.com/retail/etf/What-Is-Alphadex.aspx

"Enhanced indexing takes traditional indexing one step further by attempting to identify those stocks within a broad-based index that exhibit the fundamental characteristics that provide the greatest potential for capital appreciation. Rather than replicating traditional index models, enhanced indexing builds on the basic principles of index construction with an emphasis on generating alpha."

I have seen this kind of thing for a while now, "smart index" or something of the kind. Active fund managers are having a harder and harder time selling their products, as so many potential customers now got the news that index funds beat managed funds long term. So now they are packaging their managed funds as some kind of smarter index. Just seems kind of funny to me. But I guess some people fall for it, or they wouldn't exist.

 

[marko]

I'd be surprised that one wouldn't require some sort of SEC certification to be compensated for an index.

For example, one can't just claim to be a stock broker and trade for other people!

 

[bingybear]

I recall that some years ago, a financial company allowed you to define your own basket of stocks, then buy it in small dollar amounts like a mutual fund. Wonder if it is still around.

fidelity did that. You will find it if you you search their site. But I have not found it on obvious pages. It may just be on some non-active pages.

There are many people out there that tout investment advice with the disclaimer "for educational purposes" and the like. Some even sell news letters. I can't see the SEC going after someone who comes up with an index or portfolio under these circumstances. Now to sell it as an ETF or Mutual fund... that would never get off the ground.

Motif as a way to make an ETF or fidelity baskets would not work. You can buy and sell baskets of other investments. However, you are missing key parts: the legal structure for it to be an independent entity, authorized participants, and so on.

Does someone need SEC approval for the couch potato portfolio?
The company who sells the product to investors would need to jump through all the SEC hoops. What one could sell would be the trade name and the IP. But it would take a really good marketer to accomplish this.