I think Jamesqf might have been pointing out the slight inaccuracy that Bogle created the 500 index fund because those were the only stocks available. As I understand it, he chose the S&P 500 because it was easy.
No. I was asking two questions deriving from the link. 1) If it's an index fund, shouldn't it reflect the current makeup of the index, not what it might have been in the long-ago past? 2) If it's so heavily weighted in a few stocks/sectors, how can it be an index fund?
Per AltStash, the answer seems to be that the link author doesn't know what the heck he's talking about :-)
1) yes, the index fund reflects the current makeup of the index
2) yes, the s&p 500's top 10 components account for 18% or so of the total value of the index
Yes... index can be far from diversified. See below for the top 10 components of the Australian S&P ASX 200 (as at 16 dec). Having said that, our top 10 is a pretty decent set of companies. If you held these for the last 15 years you would have done very well, notwithstanding the carnage of 2008/09.
Security MktCap($) MktWeight Sector
Commonwealth Bank of Australia $119,605,119,631 8.68 Banking
BHP Billiton $115,139,126,114 8.36 Diversified resources
Westpac Banking Corporation $96,380,497,579 7.00 Banking
Australia and NZ Banking Group $82,996,588,076 6.02 Banking
National Australia Bank $78,354,276,293 5.69 Banking
Telstra Corporation $61,842,079,554 4.49 Telecommunications
Wesfarmers $47,217,255,476 3.43 Consumer staples (mostly)
Woolworths $40,957,805,984 2.97 Consumer staples
CSL $32,312,942,867 2.35 Biotech
Woodside Petroleum $31,102,627,302 2.26 Oil & Gas
Top 10 51.25%