Vanguard Launch of Balanced Asset Allocation ETFs

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AltaRed
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by AltaRed »

Shakespeare wrote: 05 Feb 2018 11:00 Converted 11% of the total portfolio to VBAL to start the simplification procedure.

Note that at RBCDI MAW104 and Steadyhand funds are not available.
My spouse has her assets with RBCDI so this is a welcome opportunity for her, for that primary reason.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by Shakespeare »

Yes, well, the procedure (in my LRIF) involved the following steps:

1. Sell all VT on a limit bid at the bid.
2. Check sale and amount received.
3. Calculate amount of DLR.U that can be bought, allowing for the commission.
4. Buy DLR.U at limit bid at the ask.
5. Check that the order is complete.
6. Sell DLR on limit bid at the bid.
7. Check that sale is complete.
8. Sell VSB on limit bid on bid.
9. Check that sale is complete.
10. Check C$ available and calculate the amount of VBAL that can be bought, allowing for the commission.
11. Issue buy order limit bid at the bid.
12. Check that sale is complete.
13. Try to figure out how to update the spreadsheet.

The chances of my sister doing this are nil.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by optionable68 »

Not sure today's Yahoo Finance quote on these new Vanguard ETFs are accurate
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by Shakespeare »

I've got 24.50 on both Yahoo Finance and TMX. Also G&M.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by BRIAN5000 »

optionable68 wrote: 05 Feb 2018 17:10 Not sure today's Yahoo Finance quote on these new Vanguard ETFs are accurate
I bought VCNS at $24.56 this morning and it closed at $25 :thumbsup: according to TDDI.
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by optionable68 »

BRIAN5000 wrote: 05 Feb 2018 17:28
optionable68 wrote: 05 Feb 2018 17:10 Not sure today's Yahoo Finance quote on these new Vanguard ETFs are accurate
I bought VCNS at $24.56 this morning and it closed at $25 :thumbsup: according to TDDI.
Is that even possible?

Its even showing VGRO up 1.31% today..... seems suspect
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by BRIAN5000 »

optionable68 wrote: 05 Feb 2018 17:35
BRIAN5000 wrote: 05 Feb 2018 17:28
optionable68 wrote: 05 Feb 2018 17:10 Not sure today's Yahoo Finance quote on these new Vanguard ETFs are accurate
I bought VCNS at $24.56 this morning and it closed at $25 :thumbsup: according to TDDI.
Is that even possible?
??? 100% possible cause I did it this morning what are you not sure about?

There was 10000 share trades stacked up in level II quotes on the sell side.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by DanH »

Because it was a big down day for stocks; but it was a very good day for high quality bonds from what I saw (though I didn't see closing #s for bonds). In any event, you can check Vanguard's site later tonight or tomorrow to see where price and NAV closed for today.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by optionable68 »

BRIAN5000 wrote: 05 Feb 2018 17:43
optionable68 wrote: 05 Feb 2018 17:35
BRIAN5000 wrote: 05 Feb 2018 17:28

I bought VCNS at $24.56 this morning and it closed at $25 :thumbsup: according to TDDI.
Is that even possible?
??? 100% possible cause I did it this morning what are you not sure about?

There was 10000 share trades stacked up in level II quotes on the sell side.
Sorry Brian, you may want to take another look at the Vanguard site
Last edited by optionable68 on 05 Feb 2018 21:00, edited 1 time in total.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by Shakespeare »

Looks like they aren't doing a good job of arbitraging the NAV yet. :(
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by DanH »

Because time may make this disappear or just tougher to find, a snapshot is in order. As of today's close VCNS traded at nearly 12% above NAV. That all seemed to transpire today given that the NAV was down 0.65% on the day while the market price was up more than 11%. So not only is it imperative to use limit orders when trading, but it's important to check the previous day's NAV and the direction of markets to make sure price activity is consistent with market activity and fund exposures. Maybe in time it's less important to check these things but it's something I have always monitored when trading ETFs.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by Shakespeare »

Somebody (not me) forgot to use a limit order.
Added: Dan's data are for VCNS. This graph is VBAL which I bought early this morning.
vbal1.png
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by DanH »

While less extreme, the same trends were observed with VBAL and VGRO today - where premium to NAV by end of day was roughly equal to the divergence of market price (rising) and NAV (falling).
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by ig17 »

TMXMoney shows $25.00 close for VCNS and not a single trade above that price during the day. See the last 25 trades at the bottom of the page:

https://web.tmxmoney.com/quote.php?qm_symbol=VCNS

I see the same data in TD Advanced Dashboard.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by DanH »

This is very strange. I wonder if trades initially occurred at higher prices but they were later adjusted. Yahoo!Finance also shows a $25 closing price; but look at the bid-ask spread. I've added a picture since by tomorrow my link may not align with the direction of this thread and my comments.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by AltaRed »

IIRC, a number of popular new ETFs in the past have had similar behaviours where demand pushes market prices well above NAV. I seem to remember ZPR went through this though my memory maybe wrong. I always thought the market maker would/could create units fast enough to increase supply in situations like this. Maybe not so easy, especially with fund of funds?

I agree it is best to watch NAV and use limit orders especially in the early days. Or simply stay away for the first several weeks or months.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by gsp_ »

ig17 wrote: 05 Feb 2018 22:22 TMXMoney shows $25.00 close for VCNS and not a single trade above that price during the day. See the last 25 trades at the bottom of the page:

https://web.tmxmoney.com/quote.php?qm_symbol=VCNS

I see the same data in TD Advanced Dashboard.
When I first read your post I thought it might have been because you were only looking at tsx trades but even the consolidated quote shows no trade above $25.
https://web.tmxmoney.com/quote.php?qm_symbol=Vcns:cc

For those who may not be aware, just add ":cc" to your chosen ticker to see all the exchanges that tmx carries. Roughly a third of the volume was off tsx.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by BRIAN5000 »

Hmmm should I put in a stinky "sell" bid for morning at what price? $28.50?
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by fundamental »

Has Vanguard made any comment to explain this mispricing?
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by Peculiar_Investor »

fundamental wrote: 06 Feb 2018 10:55 Has Vanguard made any comment to explain this mispricing?
I'm not sure why you think it is up to Vanguard to comment. The NAV is the asset value which Vanguard determines, the trading price is whatever the market is willing to pay, it can be a premium or a discount to NAV.

In the case of liquid ETFs, due to the authorized participants who create/redeem the underlying units, the market price should be closely matched to the NAV. The process, and why it is important, is described in What Is The Creation/Redemption Mechanism? | ETF.com. Mispricing such as yesterday's closing are most likely due to the fact the new Vanguard ETFs are not sufficiently liquid at this point in time.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by ig17 »

MikeFreedom49? wrote: 06 Feb 2018 17:27 Morningstar has an article on the price premium: http://cawidgets.morningstar.ca/Article ... &id=847876
The article doesn't explain the discrepancy between

- VCNS closing price on Vanguard web site
- VCNS trade history on TMX Money

The discrepancy remains a mystery.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by BRIAN5000 »

Code: Select all

Since Feb 2 2018	
$90,594.79 Invested*
VCNS	-$441.39
VBAL	-$702.29
VGRO 	-$1,076.30
MAW104	-$1,049.63
I guess we need a little longer time frame I think MAW104 is about 64/36% EQ/FI.
* remainder of $100,000 into Oaken HISA
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by AltaRed »

MAW104 asset allocation varies depending on portfolio manager's guess. It is not constant.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]

Post by DenisD »

Since these balanced index ETFs contain CAD-hedged foreign bond ETFs and those foreign bond ETFs just hold US domiciled ETFs, I thought I'd compare the performance of two existing US bond ETFs: VBU in Canada and BND in the US. My understanding is VBU is CAD-hedged and just holds BND. With perfect hedging, the gain/loss of the two ETFs should be the same in the different currencies except for the difference in fees. Here are the NAV and market total returns for the past three years. All ETF numbers are from Vanguard.

Code: Select all

           NAV returns                Market returns           USD returns
 Year      VBU      BND     Diff      VBU      BND     Diff
 2017     2.86     3.62    -0.76     2.89     3.54    -0.65    -6.57
 2016     2.15     2.57    -0.42     2.14     2.54    -0.40    -2.98
 2015     0.72     0.39     0.33     0.82     0.49     0.33    19.31
The hedging is not that great.

Added USD gain versus CAD.
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