I am very confused about the synthetic index fund strategy…
It says in the book Long stock = Long risk-free bond + Long futures…so to create a synthetic index fund, an investor needs to invest in risk-bond and at the same time pay for the future contacts…which sounds like a double payout at time zero?
This strategies essentially wants to have the risk-free bond pay off the cost of the future contracts… so what is says in the book is really the position this strategy starts with already has an existing position in bond…so no additional outlay is needed…did i understand it correctly?