The stock market and indices like the S&P 500 see constant turnover as companies grow, shrink, merge, or go out of business. On average, 20% of S&P 500 constituents change every five years, according to Goldman Sachs. This turnover impacts market behavior and stock performance.

Six of the Magnificent 7 market leaders were only added to the S&P 500 in the past 25 years. Knowing which stocks to own and when to own them is challenging due to turnover. Historical market returns have been driven by a minority of stocks, making it harder to pick winners than losers.

Buying and holding an S&P 500 index fund is considered passive investing, but the fund’s composition changes as companies come and go from the index. Despite turnover, the S&P 500 index continues to trend higher as winners are captured and losers are weeded out.

Read more at Yahoo Finance: The average S&P 500 company is spending less time in the index