While re-reading the last few chapters of William Bernstein's Four Pillars of Investing, I noticed a discussion regarding index funds: not all indexes hold all of the stocks that compose the index - some - perhaps dependent upon the specific index hold a statistical sample designed to replicate the overall behavior of the index.
While examining the prospecti of Black Rock's index funds I found footnotes where they reserved the right to use a statistical approximation of an index rahter than the actual index.
This of course made me curious - how close was there approximation to the actual index. I flipped through the prospectus discussing their s+p 500, international, small cap and bond indexes. In most cases their performance was similar to the index - their expense ratios. Unfortunately their expense ratios are very high compared to vanguard and schwab. Approx 0.6 percent is pretty ridiculous for an s+p 500 index -- fidelity's spartan is approx 0.08 percent -- black rock is almost 8 timesd more expensive. Frankly it's ridiculous. You end up paying more for lower perfomance.
I think the next posting I'll write is a comparison of the leading index fund family expense ratios.