Marvell is joining the S&P 500 — but history says the early bump comes with a big catch: Chart of the Day

Marvell Technology ( MRVL ) jumped 9.6% Monday after getting invited into the S&P 500 ( ^GSPC ), the kind of move that can force index funds to buy and traders to pile in ahead of them.

The catch is that the edge usually comes early. After analyzing 1,926 S&P 500 additions going back to 1957, Yahoo Finance found that stocks tend to outperform before joining the index, then fall behind the market after they get in.

For funds that track the S&P 500, a new member has to be bought. That creates a simple setup: Index funds need shares, hedge funds try to anticipate the buying, and the stocks getting added tend to be performing well already.

For regular quarterly additions like Marvell's, the median stock beat the S&P 500 by 3.3% in the 25 trading days before joining the index.

That history is what makes Marvell's move tricky. The chart suggests the cleanest index-driven edge often shows up before entry day — and Marvell has already captured a big piece of that move with nearly two weeks still to go before its June 22 inclusion.

But the official entry date has not been the finish line. The picture gets less friendly after the stock officially joins, which is what this next chart shows.

The chart does not suggest stocks that join the index are losing money outright. It measures performance against the S&P 500, meaning the stock's return minus the index's return over the same stretch.

On that basis, the median addition trailed the index by about 1% after one quarter, about 2% after two quarters, and nearly 8% after one year. Nearly 60% of additions were trailing the S&P 500's performance one year later.