Passive fund stocks

strawb_shortcake

Relatively new to investing but have noticed that the number of stocks within the Vanguard all cap has increased, it was 69?? and now 7012 I think?? 
Just wondered how this works on a passive fund? 
TIA

MX5huggy

It’s investing in everything so anything new has to be bought. Any de merger or companies launching on the stock market are added. 

(It doesn’t actually hold absolutely everything read the key facts for the full description).  

Thrugelmir

The index itself is actually 9152 stocks currently. 

strawb_shortcake

Thrugelmir said:

The index itself is actually 9152 stocks currently. 

Ah okay, I got the 7012 from the Vanguard website but was only the top level information 

eastmidsaver

yes as pointed out by poster above,  they will aim to buy and replicate the index and that is the number of stocks they hold at the moment. there are many investment firms who do this. Vanguard as you mention, also L & G, Blackrock, HSBC etc.   However it is not always perfect, so best thing is to consider charges,  but also you can see the tracking error rate too on the Key Info Docs.

MX5huggy

The Vanguard fund hold 7012 currently but the index they are tracking has 9152. Vanguard don’t need to hold all of the 9152 to track the index closely. 

Thrugelmir

The smallest stock in the Index has a market capitilisation of $13m whereas the largest is $2,147,881m.  There's a variety of reasons why the fund wouldn't currently hold the smallest stock. The overriding one being the fact that the price movement of the stock will have no bearing on the performance of the fund. 

strawb_shortcake

Thank you all, was just curious how it worked with a passive fund changing. 

Thrugelmir

The fund manager will buy/sell stocks to weight the fund accordingly. The addition of Tesla last December resulted in considerable disruption to their portfolios. Little choice but to pay the inflated price for the stock. 

MX5huggy

Why did Tesla only come into a All World Global index in December? It joint the S&P then.

Thrugelmir

MX5huggy said:

Why did Tesla only come into a All World Global index in December? It joint the S&P then.

Didn't meet the qualifying criteria until then.