How do you front run a mutual fund? The price is the price.
I put the word in quotes, because this is a perfectly legitimate way of front running. The major indices are all public, and anyone can take a crack at this. In other words, if I announce to the world a month in advance that on a specific day and a very specific time of the day (at the closing auction) I'm going to buy X amount of specific stocks and sell Y amount in other stocks, I can't blame people for using that information against me.
> Basically every index of any significance is already being monitored and rebalancing effects are "front-run" this way.
> I put the word in quotes, because this is a perfectly legitimate way of front running.
No; it is not "front running."
as a "consumer" of the mutual fund, you can't.
but the mutual fund itself makes large trades: somebody downstream executing those trades or having access to that data could front run.
But you can't front run shares of mutual funds; they always trade at close of business at NAV.
You could potentially front run ETFs, but if you're worried about that, you can use limit orders and get the price you want or not transact. As long as you use a competent broker that offers limit orders.
> A form of front-running in index funds is common and isn't illegal.
> Index funds track a financial index by mirroring the index's portfolio. The composition of the index changes periodically to balance it accurately as the stocks that make it up change dramatically in price or as stocks are added or removed from the index. That forces the fund's managers to buy or sell some components of the index.
Otherwise, I wouldn't call those things front running, as there's no indication of imminent activity.
If a material increase in lending rates on a heavily shorted stock was announced, and you bought because you were pretty sure the shorts would be buying to close, that could be front running, yeah.
I dunno about market moves based on Elon's role in the culture wars, but maybe if he did something in particular.
In general, buy on the rumor, sell on the news could qualify as front running under this definition, but I think I'd want to narrow it a bit to working to trade ahead of perceived imminent and definite trades. Most of the illegal front running is trading ahead of specific trades in response to seeing those orders.
Any evidence this is actually happening, rather than something like "this ETF rebalances every quarter, they're unbalanced, and are expected to rebalance in this way", or "this company is probably going to get included in the S&P 500 because it's doing really well"? What makes this sort of "front running" less acceptable than buying because "I like the stock", or trading on technical analysis?
https://www.sec.gov/newsroom/press-releases/2021-118
https://www.sec.gov/newsroom/press-releases/2021-186
https://www.sec.gov/newsroom/press-releases/2022-228
Trading ahead of index funds when an index change is announced is front running in my book, but it isn't illegal front running; but I don't consider it less acceptable than buying because the graph makes a funny shape.
>https://www.sec.gov/newsroom/press-releases/2021-118
>Wygovsky repeatedly traded in his family members’ accounts held at brokerage firms in the United States ahead of large trades that were executed on the same days in the accounts of his employer’s advisory clients.
>https://www.sec.gov/newsroom/press-releases/2021-186
>Polevikov had access to real-time, non-public information about the size and timing of his employers' securities orders and trades, and used that information to secretly trade on, and ahead of, his employers' trades.
>https://www.sec.gov/newsroom/press-releases/2022-228
>Billimek would inform Williams of the asset management firm’s market-moving trades prior to their execution
I never said trading a stock ahead of it being added or removed to the S&P 500, or between the announcement of it being added or removed and index funds actually purchasing it is illegal, immoral, or unfair, or less acceptable than any other trade.
Just that it's front running. And then you asked if there were examples of illegal front running, so I provided those --- which aren't examples of trading ahead of index funds, because trading ahead of index funds isn't illegal.
I'm not really sure what you're asking at this point.