I like this idea, I particularly like the community-driven aspect of it and the make your own fund idea, just because it levels the playing field a bit for individuals which I think is no bad thing. Issues would probably be around trading costs as you say, but it would depend how often the ETF was balanced - maybe daily would be fine.
I haven’t looked into how exactly you’d find that days weightings of holdings from them officially, but they all publish their methodology. So, in theory, you could figure it out yourself.
If Freetrade were to offer it, maybe they’d have to pay that premium none-the-less. But individuals doing it for themselves with some script that works out the daily holdings wouldn’t be doing so “commercially” and there’d be no way of an index provider knowing about it.
Regarding time-cost, my proposition would be to make yourself a “robot” (a little script that scrapes some websites) to generate the composition, and if Freetrade had API access, even place the buy and sell orders.
Yes, there’d be that time delay waiting for 4pm. I’ve no idea how to assess how significant that would be though. I haven’t seen how much index composition really changes on a hourly or daily basis.
And yes, I think this idea would only be feasible with a relatively large cap index like the NASDAQ 100. No idea if any of its components would be difficult for Freetrade to offer.
BTW, does that page provide all the information you’d need to track this index yourself? You just need ticker and share volume, right? Or am I misinterpreting?