How could the historical performance of index funds affect Nasdaq?
Index fund popularity may increase trading volume on Nasdaq The S&P 500 total return index, which assumes dividend reinvestment, grew significantly over the following decades. Because Vanguard lists and trades its exchange-traded funds on the Nasdaq stock exchange, the sustained popularity and strong performance of these index funds could lead to increased demand and higher trading volume for the assets listed on the platform.
- Effect
- Mild positive
- How direct
- Brind's reasoning
- When
- Over the long term
- The story
- Gone quiet
How it reaches Nasdaq
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On October 19, 1987, the S&P 500 lost 20.5% in one session, while the Dow Jones Industrial Average dropped 22.6%. The analysis showed that while a 20.5% drop from the October 14, 1987 close would have been severe, those who invested on Black Monday saw significant growth over time.
The full event1independent outlet -
Vanguard is the asset manager responsible for creating and operating various exchange-traded funds, and these funds are listed and traded on the Nasdaq stock exchange. Increased investor confidence and demand for Vanguard's successful index funds would translate directly into higher trading volume for the ETFs listed on Nasdaq.
No report states this step directly. Brind drew it from the reporting on each side of it, so treat it as an informed guess.
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American fully electronic stock exchange
Everything about Nasdaq
Tap any step to see the evidence behind it.
The facts so far
As reported. Each one links to where it comes from.
Why it matters
For Nasdaq, the exchange's revenue and operational health are tied to trading volume and liquidity. As a major platform for listing ETFs, the sustained popularity of large, successful index funds—many of which are managed by Vanguard—is a key driver of its activity. Increased investor interest in passive investing, fueled by historical performance narratives, directly supports the exchange's business model.
This trend reflects the broader shift in investment strategy toward low-cost, diversified index funds, a movement Vanguard helped pioneer. While the reports focus on a historical event, the underlying principle—that long-term, low-cost investing yields strong results—continues to shape market behavior and the demand for the financial products listed on exchanges like Nasdaq.
What we don't know yet
- Will the current market environment allow index funds to maintain the same level of sustained growth seen after Black Monday?
- How will regulatory changes affect the trading volume of Vanguard's ETFs on Nasdaq?
What would change this answer
Who else could feel it
Other possible ripples from the same event.
Reporting
- fool.comOct 19
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Brind's analysis is written by AI from the reporting linked above and can be wrong. This explainer is a possibility worth considering, not a forecast: steps marked as Brind's reasoning are not stated in the reporting. It is not investment advice; do your own research.