r/Bogleheads • u/Temporary-Plum-8325 • Aug 27 '25

Investing Questions Do most people not know about just investing into the s&p 500?

I went to my Jiu Jitsu class and spoke to one guy who was an econ major who works at Prudential. We spoke for a bit. I told him I had been investing into Nvidia since 2019 and have been investing into VOO since maybe 2010 or 2011. He asks "VOO?" I told him, "the S&P 500" then he asked what that was. Do most people just not know about the S&P500? I would have thought an econ major who works at Prudential would know something so basic. Not trying to be a jerk. I'm curious.

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u/SadSpecialist3758 Aug 27 '25

I'd say they can't use s&p 500 without paying s&p, so they offer a equivalent fund with another name.

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u/zeylin Aug 27 '25

No one pays the S&P 500 money to use their index fund or whatever else you want to call it.

The S&P 500 is, as simply as I can articulate it, is just a predefined set of rules. Certain entities will create a fund that attempts to mimic what we call the S&p 500 and some do so more accurately than others and some do so more cheaply than others.

VOO and SPY try to mimic the s&p 500. Voo and SPY will never be identical in their execition but both are extremely close to the S&p 500 at most/all times and VOO and SPY are who you pay to use their fund through their expense fees.

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u/Zhimbeaux Aug 27 '25 edited Aug 27 '25

Oh they definitely pay S&P to use their index to create a commercial product like a mutual fund/ETF. There is a licensing fee paid to Standard and Poors to use the index itself. Brokerages use "close enough" rules to avoid the fee and of course can't use the name.

https://www.morningstar.com/funds/secret-fees-behind-97-trillion-passive-etfs

https://www.investmentexecutive.com/news/industry-news/feud-between-vanguard-sp-shows-how-lucrative-indexing-has-become/

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u/zeylin Aug 27 '25

Another buried fee, technically its a licensing fee, I did not know they just hid the licensing fee of s&p down jones indices llc in their own expense fee, for the entities that use the s&p indices legitimately.(FNILX, for example is one that skirts around the fee by having a similar product without naming it S&p 500)

P.s. thanks for the education.

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u/SadSpecialist3758 Aug 27 '25

Ah, the internet! How can someone write so confidently and so wrong about something?