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Frequent Contributor

I’ve noticed significant variances between (related) ETF and OEF closing prices. For example, VBILX closed flat today but BIV closed up 0.24%.

Logically that means that BIV closed at a 0.24% premium.

Over longer periods, the charts are identical to the naked eye. But a 0.25% premium is not trivial.

I happen to own both the OEF at VG and the ETF at another brokerage. I would prefer to own only OEFs, but it’s more convenient (no fees) to own the ETF outside of Vanguard.

During the trading day, there’s no way to know what the actual (instantaneous) NAV is; the best proxy is the ETF itself, whose price wobbles around. I suppose if I wanted to convert the ETF to the OEF (sell and buy on the same day), the best one can do is to try to sell the ETF on a temporary spike in the daily chart, or just wait until 3:55 PM on a day when the chart is constant or rising throughout the day.

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Frequent Contributor

BIV and VBILX were quite close before 2020, but things have been volatile in 2020. Except for March when the difference widened a lot, the difference in 2020 has been about +/- 0.75%.   https://stockcharts.com/h-perf/ui?s=BIV&compare=VBILX&id=p16860840911

Of course you won't see any difference in their M* Charts as those are for NAVs, not actual prices.

YBB

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Frequent Contributor

BIV and VBILX were quite close before 2020, but things have been volatile in 2020. Except for March when the difference widened a lot, the difference in 2020 has been about +/- 0.75%.   https://stockcharts.com/h-perf/ui?s=BIV&compare=VBILX&id=p16860840911

Of course you won't see any difference in their M* Charts as those are for NAVs, not actual prices.

YBB

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Frequent Contributor

@yogibearbull wrote:

Of course you won't see any difference in their M* Charts as those are for NAVs, not actual prices.


I didn’t know that. I assumed that BIV would chart its price and XBIVX would chart its NAV. Thanks for clarifying.

According to your linked chart, VBILX has done about 1% better than BIV over three years.

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Explorer ○○○

Big disparity today with the S&P 500 etfs. I wonder if some sophisticated high frequency trading operations are taking advantage of these differences.

ETFs-    SPY  +1.28%   VOO  +1.33%

Mutual Funds-   VFIAX  +1.55%   VFINX  +1.55%

The annual expense ratio of these funds is about 3 basis points a year. so the one day tracking error is about 7 years worth of expenses. 

 

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Frequent Contributor
BIV has actually closed > 0.1% higher than VBILX for three straight days. I’m not obsessing about it, but it is weird.

I’m not sure whether there is any argument, on general principles, that supports the ETF over the OEF or vice versa.
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Participant ○○○

I've been noticing those discrepancies recently as well.  For the last couple of months I've owned 3 sets of ETF/OEF twins at Vanguard, VBILX/BIV, VFIAX/VOO, VLGSX/VGLT, and I've noticed that the closing price changes for the ETF and OEF do differ, sometimes significantly.  I haven't noticed a pattern, though I was not looking for one.  The idea that a high frequency trader is exploiting the gap is an interesting twist.  I would guess that the "losers" would be ETF traders and authorized participants. I sincerely hope Vanguard is looking into this as it does affect investors.  Since Vanguard ETFs are share classes of the mutual funds, NAV changes really should be the same as for the MF.

Since bond funds are not easily replicated, I am not surprised that the divergence for BIV/VBILX exists, but surely the SP500 should be easily replicable, as should LT US Treasuries - there are only so many combinations of maturity dates and coupon rates.

 

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Now that VG has eliminated its investor class on index funds, there should be no real difference in return.  The difference will be to an investor who buys ETFs intraday with a different price than the OEF bought at 4:00 since his/her shares will be worth more or less than the OEF when sold.

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Contributor ○○○

Plug BIV into the legacy (price) chart and you get both price and NAV. I believe the price fluctuations during the trading day come from actual trading. I have a lo-ball order in for an ETF that has been partially filled to 1/2  of the order on 2 trading days. Can't do that with an OEF.


@chang wrote:
BIV has actually closed > 0.1% higher than VBILX for three straight days. I’m not obsessing about it, but it is weird.

I’m not sure whether there is any argument, on general principles, that supports the ETF over the OEF or vice versa.

 

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Frequent Contributor

@chang wrote:
BIV has actually closed > 0.1% higher than VBILX for three straight days. I’m not obsessing about it, but it is weird.

I’m not sure whether there is any argument, on general principles, that supports the ETF over the OEF or vice versa.

The obvious reason for an ETF is the ability to trade during the day. A good example could be a trailing sell order at 6% for SPY, this will guarantee it would sell at a max loss of 6% from any last top.

Most investors that have the choice of the same OEF as an ETF, I would go with the mutual fund. Remember, that even if the trading fees are waived for an ETF there is still the bid-ask spread where an OEF doesn't have it.

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Frequent Contributor

M* doesn't even recognize tickers such as XBIVX, only Stockcharts and Yahoo Finance, etc do. M* Charts show NAVs [default] for everything [OEFs, ETFs, CEFs]. Old M* Charts had a click for Prices [others were for Growth of 10K (default) and Rolling Returns]. New M* Charts are just terrible.

YBB
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Explorer ○○○
If you are a long term buy and hold investor ETFs there would be no adverse
effect. But some investors trade ETFs using a month-end timing model where
trades are done the last day of the month or first day of next month.Their
ETF executions may be sub-par if the bots are taking advantage.
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Frequent Contributor

Fourth day ... same thing ... BIV up 0.24%, VBILX up 0.07%. The accumulated disparity must be around 1-2% in a week. I wish M* showed “premium/discount” for ETFs.

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Frequent Contributor

@yogibearbull wrote:

M* doesn't even recognize tickers such as XBIVX, only Stockcharts and Yahoo Finance, etc do. M* Charts show NAVs [default] for everything [OEFs, ETFs, CEFs]. Old M* Charts had a click for Prices [others were for Growth of 10K (default) and Rolling Returns]. New M* Charts are just terrible.


The old chart doesn't recognize XBIVX either:

http://quotes.morningstar.com/chart/fund/chart?t=VBILX&region=usa&culture=en_US

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As an aside, VG shows that VBILX has an ER of 0.07%, while BIV has an ER of 0.05%.

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