Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 09-15-2010, 04:45 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
I checked out a couple new VG etfs today, and the volume was tiny, yet the bid/ask spreads were very small (similar to much more active iShares of the same asset class). Less than 0.1% on those I looked at. Not normal for very thinly traded issues.
__________________

__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO 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 Early-Retirement.org 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!

Old 09-16-2010, 02:18 PM   #22
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
I guess I can see why they did the other ones, but competing against SPY doesn't have any real advantage.

VG sometimes has an alter ego, like their recent attempts to actively prospect FAs to use their ETFs. Almost seems ironic that the "fire your advisor" company wants advisors to help them.........

I would think they would make a bigger push to get their MF clients to diversify into ETFs.............
__________________

__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 09-16-2010, 02:47 PM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by FinanceDude View Post
I guess I can see why they did the other ones, but competing against SPY doesn't have any real advantage.

VG sometimes has an alter ego, like their recent attempts to actively prospect FAs to use their ETFs. Almost seems ironic that the "fire your advisor" company wants advisors to help them.........
I'm not sure if you are just trolling ( ), but I assume you know it is all about AUM.

Say VG has $10 billion in an index fund and it costs them x to manage the fund assets. If they can get $20 billion in the fund (by reaching out to FA's), and spend less than 2x to manage the $20 billion, then they are reducing expense ratios. Lowering expense ratios is good for Vanguard investors. Very good.

And the sales job should* be easy for VG, since the expense ratios are often lower on VG's etf's versus the competition. I would guess that these brand new VG etfs will initially suffer from lower liquidity, higher bid-ask spreads, larger discounts/premiums to NAV's, greater potential for market impact costs, etc.

* I say "should" because FA's don't necessarily understand or want to trim a few basis points off of their investment expenses for self-serving reasons (bigger commissions from competing investments)
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 09-17-2010, 09:07 AM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by FUEGO View Post
I'm not sure if you are just trolling ( ), but I assume you know it is all about AUM.
I don't troll............if folks want to wear their neat 70's rose colored glasses and think every FA has a 100 foot yacht and drives a Bentley, well, then I can't talk them out of that............

Quote:
And the sales job should* be easy for VG, since the expense ratios are often lower on VG's etf's versus the competition. I would guess that these brand new VG etfs will initially suffer from lower liquidity, higher bid-ask spreads, larger discounts/premiums to NAV's, greater potential for market impact costs, etc.
SPY's ER is 9 basis points...........that's a VG type ER number and I have been using SPY for 10 years..............

Quote:
* I say "should" because FA's don't necessarily understand or want to trim a few basis points off of their investment expenses for self-serving reasons (bigger commissions from competing investments)
Until ya walk a mile in my shoes..............
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 09-17-2010, 09:35 AM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
FD, I'm just busting your chops. I know you are one of the good guy FA's, right? My comments are addressed towards the lumpen slums of FA's that sell load funds inside variable annuities inside IRAs. That is, if they can't get you to buy a whole life policy first.

SPY still has an ER that is 50% higher than VG's VOO. You'll only save $30 a year on a $100,000 position. And right now there is only a penny bid-ask spread (0.02%), and enough bid/ask size to handle at least $80,000 in one trade without moving the market. If I was in the market for some SP500 ETF, I would probably buy VOO. But I wouldn't worry about selling and paying cap gains on SPY to save a few bucks a year in expense ratio.

A big savings will be for those having a brokerage account at VG, they can trade free on the ETFs now. If they are buying multiple ETFs on a periodic basis that is.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 09-17-2010, 10:10 AM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by FUEGO View Post
FD, I'm just busting your chops. I know you are one of the good guy FA's, right? My comments are addressed towards the lumpen slums of FA's that sell load funds inside variable annuities inside IRAs.
Like the lumpen slums reference.........

Quote:
SPY still has an ER that is 50% higher than VG's VOO. You'll only save $30 a year on a $100,000 position. And right now there is only a penny bid-ask spread (0.02%), and enough bid/ask size to handle at least $80,000 in one trade without moving the market. If I was in the market for some SP500 ETF, I would probably buy VOO. But I wouldn't worry about selling and paying cap gains on SPY to save a few bucks a year in expense ratio.
A little humor from the dark side. I was at an FA meeting in Chicago a few years ago. They had some guy talk as filler before Nick Murray was scheduled to speak. He talked about how low the ER ratios were at VG. I remember his quote clearly:

"Why of course their ER are low, they are index funds, it's not like their managers DO ANYTHING"!!!!
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 09-17-2010, 10:21 AM   #27
Recycles dryer sheets
 
Join Date: Feb 2007
Posts: 197
Quote:
Originally Posted by FUEGO View Post
SPY still has an ER that is 50% higher than VG's VOO. You'll only save $30 a year on a $100,000 position. And right now there is only a penny bid-ask spread (0.02%), and enough bid/ask size to handle at least $80,000 in one trade without moving the market. If I was in the market for some SP500 ETF, I would probably buy VOO. But I wouldn't worry about selling and paying cap gains on SPY to save a few bucks a year in expense ratio.

A big savings will be for those having a brokerage account at VG, they can trade free on the ETFs now. If they are buying multiple ETFs on a periodic basis that is.
I dunno if I agree with the first part of your assessment. Looking now provides a more difficult decision on the two. Looking at the two trading side by side (I'm using quote tracker), I see VOO tracking with a much smaller bid and ask size, tiny volume (compared to SPY), and sometimes higher spread (this particular capture only has a penny spread but even that is a higher percentage due to a lower stock price). Also important is the underlying market cap (under $15 million compared to $80 BILLION).

I can't comment on tracking error, but that would be an interesting analysis. I'm pretty sure some enterprising folks already have an arbitrage model set up (w/automated trading) between them.

But, maybe your right. Most people won't look at market depth or spread or underlying liquidity which shows its ugly head under 'difficult' market conditions, but will only look at the expense ratio. The good news is that all the other factors would improve as fungible money flows to a lower-cost solution. My bet is that if Vanguard can get this going (e.g. by providing liquidity) SPY will eventually be forced into reducing expenses.
Attached Files
File Type: pdf spy and voo.pdf (8.4 KB, 2 views)
__________________
copyright1997reloaded is offline   Reply With Quote
Old 09-17-2010, 11:50 AM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by copyright1997reloaded View Post
My bet is that if Vanguard can get this going (e.g. by providing liquidity) SPY will eventually be forced into reducing expenses.
Doubt Wall Street thinks that they need to lower it from 9 bp..........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 09-17-2010, 03:56 PM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by copyright1997reloaded View Post
I dunno if I agree with the first part of your assessment. Looking now provides a more difficult decision on the two. Looking at the two trading side by side (I'm using quote tracker), I see VOO tracking with a much smaller bid and ask size, tiny volume (compared to SPY), and sometimes higher spread (this particular capture only has a penny spread but even that is a higher percentage due to a lower stock price). Also important is the underlying market cap (under $15 million compared to $80 BILLION).

I can't comment on tracking error, but that would be an interesting analysis. I'm pretty sure some enterprising folks already have an arbitrage model set up (w/automated trading) between them.
All valid points and concerns. It would be silly to save 0.03% in ER and lose 0.5-1% to paying a premium to NAV that may not be arbitraged away as easily on VOO as SPY. Until the volume picks up.
__________________

__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Reply


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
Zecco and ETFs success108 FIRE and Money 4 07-02-2007 10:04 PM
ETFs yakers FIRE and Money 11 07-02-2007 10:00 PM
ETFs Brat FIRE and Money 12 01-04-2007 11:27 PM
ETFs PJ03 FIRE and Money 5 01-19-2006 07:09 AM
ETFs DFW_M5 FIRE and Money 9 12-24-2003 04:21 AM

 

 
All times are GMT -6. The time now is 06:47 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.