You can make a mutual fund or ETF with any stocks you want, you just can't call it a NASDAQ 100 fund if you're not tracking the NASDAQ 100 index.

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lxgr 4 hours ago | parent | next [-]

It's an interesting question whether you could legally track the NASDAQ 100 without calling it that, or something very similar, e.g. "NASDAQ 100, but with a one year delay for new listings".

But assuming it is: How would you even call it, and how would you describe your methodology in the prospectus? "Tech 100 (compare with e.g. NASDAQ)"?

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tonyedgecombe 4 hours ago | parent | prev [-]

Is that really true? It doesn’t sound likely to me. Then again I’m often surprised by this stuff.

	▲	mandevil 2 hours ago \| parent [-]
		In order to call it a NASDAQ 100 Tracking Fund you need to pay the NASDAQ a licensing fee (same with S&P500, Wilshire 5000, etc.). The contract you have with NASDAQ will determine exactly how much freedom you have to change rules and still call it a NASDAQ 100 fund. I've never seen a licensing agreement, don't know anything about how they would typically read. There is also the concept of "Index Tracking Error". No fund can perfectly mimic the index, and that is expected and understood, but the goal is generally to have the tracking error <0.1%- 1% would be a bad track. And so an index fund could take the risk that they will have a tracking error and delay picking up SpaceX even after it joins the official index, but then if it goes up they will look worse relative to their real competitors, the other NASDAQ 100 tracking index funds. If SpaceX goes down, of course, they will have positive tracking error, but I'm not sure how much potential investors would value that. SpaceX would be something like 4% of the NASDAQ 100 at it's announced expected market cap, so a 10% movement by SpaceX would be enough on its own to get you into the notable tracking error range if you didn't have any exposure to it.