Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Barclay iShares
Old 02-01-2005, 07:37 PM   #1
Thinks s/he gets paid by the post
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Barclay iShares

For some reason, on a couple of recent occasions, I've run across references to Barclay iShares as a lower cost index investment than Vanguard funds.

Anyone have information? The published expense ratio for the iShares S&P500 index fund is 0.09%. Is there a catch?


sgeeeee is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Barclay iShares
Old 02-01-2005, 08:23 PM   #2
Thinks s/he gets paid by the post
Hyperborea's Avatar
Join Date: Sep 2002
Location: Silicon Valley
Posts: 1,008
Re: Barclay iShares

Bernstein has a couple of columns on this on his web page. In summary, it's the tracking error.

Here's two of those columns:

Hyperborea is offline   Reply With Quote
Re: Barclay iShares
Old 02-02-2005, 07:12 AM   #3
Moderator Emeritus
Nords's Avatar
Join Date: Dec 2002
Location: Oahu
Posts: 26,636
Re: Barclay iShares

For some reason, on a couple of recent occasions, I've *run across references to Barclay iShares as a lower cost index investment than Vanguard funds.
It just depends on the funds. Some iShares ETFs have ERs of 0.25% or 0.4%. Or their international ETF (EFA) lacks the dollar hedging offered by some mutual funds.

And of course it depends on brokerage fees. For smaller periodic amounts, one writer has advised stashing DCA money in Vanguard until $10K-$25K is accumulated and then cashing in the Vanguard funds to make a single purchase of the corresponding ETF.

But others swear by Sauter's experience at index replication with minimal tracking error.

I think Barclays works very hard to keep their more popular ETFs a bp or two below Vanguard & Fidelity IOT profit from the fees paid by arbitrageurs who are buying the units and redeeming them. Hopefully their fee income makes up for the loss-leader expense ratio.

The book written on, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Barclay iShares
Old 02-02-2005, 10:49 AM   #4
Thinks s/he gets paid by the post
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: Barclay iShares

Hyper, Nords,

Thanks for the info.
sgeeeee is offline   Reply With Quote
Re: Barclay iShares
Old 02-09-2005, 11:32 AM   #5
Recycles dryer sheets
Join Date: Feb 2005
Posts: 454
Re: Barclay iShares

If I were to make a decision based on Vanguard's/Gus' record on positive tracking errors, I'd want to understand risks taken to beat the index.
Are bets being made which ordinarily would give a slight advantage, but very rarely lead to big losses?
A Vanguard bond index fund had a significant negative tracking error not long ago. IIRC, in that case, bets were made in the form of deviating from the index.
Another attempt to beat the index involves futures. Perhaps if done properly, extra return can be obtained without risk? I haven't researched this; am imagining using futures trades to collect on spreads somehow, when there's fund redemptions or inflow, without changing exposure to the index. Just don't screw up...

Bernstien talks about corporate culture at Vanguard being an advantage. I suppose I still feel that way, but not as much as I used to.

Depending on frequency of trades/rebalancing, the differnece between your executed price and the NAV can be a significant downside to ETFs. It is small though if you buy and hold, for many ETFs.

Another reason to chose an ETF might be the availability of an index you want to own.
For example, I like the Barra value indexes, mostly because they don't penalize a stock for growing earnings. The Vanguard (Morgan Stanley) and DJ, Russel, Morningstar indexes do, if I understand correctly.
Others may have different reasons to chose an index, such as getting deeper value (like Morningstar omitting core stocks from value index) or techniques to slow turnover (like Morgan Stanley delaying removals).
lazyday is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Global bond funds LOL! FIRE and Money 10 02-27-2007 03:23 PM
IJS vs. VBR (iShares small value & Vanguard small value) Fttaw FIRE and Money 1 01-22-2007 04:10 PM
Ishares TIP Feb Dividend CybrMike FIRE and Money 2 03-02-2006 02:23 PM
Using Exchange-Traded Funds JLP FIRE and Money 18 01-26-2005 09:42 AM


All times are GMT -6. The time now is 10:41 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.