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Jacko2, you seem to have all the answers.

Well. Here is what scares me:

Suppose there was a crash, and the S&P 500 lost half its value in one day. Would this be enough to blow the lid off the whole equation and sink the fund?

Might the loss exceed their margin, forcing them to liquidate so many T-Bills that they end up with nothing?

Someone would have to convince me that the fund would track the S&P through abnormal events (like a crash) as well as normal trading before I'd put my money in.

For now I do keep 1/3 of my money in indexes, but I have been using TSE:HIP and AMEX:SPY (I also refuse to give my money to an index MF that charges me a large MER, where large is anything >0.25%).
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