Rick Ferri wrote:Bond exchange-traded funds can be tricky to trade at times. Although these securities trade within a reasonable range of their net-asset value (NAV) most days, there are those periods when the ETF market just doesn’t want to cooperate. Last week was a good example. Here are two ways to solve this problem.
Solving The Bond ETF Discount Problem
SnowSkier wrote:Couldn't this be a good thing, if you were buying a bond ETF when everyone else was selling? Seems like you would add to your bond allocation (if you wanted to) at a price less-than-NAV?
This is precisely what I did, thanks to ogd's helpful advice in the thread he linked to. Made ~3.5% in 3 days by swapping VWLUX for HYD, and it would've been closer to 10% if I'd bought on Monday and held on to it until today rather than selling yesterday.MnD wrote:ETF's last week.
Or tax-loss harvesting with a "kicker" - sell a mutual fund with an unrealized loss at closing NAV and buy a similar ETF same day right before the close at a significant discount to NAV.
How to solve the high expense ratios in specialty ETFs"
Solution: do not use them.
This may not be the solution you think it is. It only raises the bigger question of why you would trust the NAV any more than you would trust the ETF price. The NAV is calculated from the price of most recent trades, but if there is illiquidity, that calculation could also be distorted.
Best of Both Worlds wrote:MUNI ETF was down .90% today. I personally own VWIUX and was wondering whether I can expect a similar decline in price today as well. Yields were not up today so I am a little confused as to this decline. Is it possibly premium/discount related?
Rick Ferri wrote:Best of Both Worlds wrote:MUNI ETF was down .90% today. I personally own VWIUX and was wondering whether I can expect a similar decline in price today as well. Yields were not up today so I am a little confused as to this decline. Is it possibly premium/discount related?
Municipals, high yield and investment grade corporate are down today. It could be related to adviser/manager window dressing on the last trading day of the quarter. Some advisers/managers play a hide-and-seek game with clients by selling losing positions on the last day of a quarter, then make believe they never owned them. The losing position doesn't show up on a client's quarterly valuation report, which is based on end of the day holdings. You may say, "Do advisers think client's are that stupid?" The answer is, "Yes, some advisers do believe their clients are that stupid."
Rick Ferri wrote:I doubt closed-end muni funds will be down much today. The window dressing happens in the ETF market. Someone puts in a large order to buy or sell at the end of the day and this affects prices. With MUB, there was a large sell order about 2:45 and then buying started back up. This caused about a 0.7% swing in the price in 30 minutes. This was a trade related issue. The entire muni market did not move that much in such a short period.
Best of Both Worlds wrote:VWIUX NAV unchanged for 6-28.