Help buying VSS (FTSE Ex-US small cap ETF)

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bhouse
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Help buying VSS (FTSE Ex-US small cap ETF)

Post by bhouse » Fri Feb 10, 2012 9:05 am

Hey Bogleheads,

I recently opened a brokerage account in order to buy the US small cap value ETF (VBR) and the FTSE Ex-US small cap ETF (VSS). However, I am having trouble figuring out what to do when buying VSS. I read all the wiki pages on ordering ETFs as well as many other resources, but I am confused by the huge bid-ask spreads. Right now the Bid is ~87 and the ask is ~104. The market closed around ~89. How do I place an order on this?? The safe bet (Limit order at market value of 104) seems ridiculous since the ask is so high, but a limit order of $89 seems hopeless. Has anyone bought VSS recently or is there some other resources I need to be reading about that I am missing? Thanks for the help!

YDNAL
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by YDNAL » Fri Feb 10, 2012 9:13 am

bhouse wrote:Hey Bogleheads,

I recently opened a brokerage account in order to buy the US small cap value ETF (VBR) and the FTSE Ex-US small cap ETF (VSS). However, I am having trouble figuring out what to do when buying VSS. I read all the wiki pages on ordering ETFs as well as many other resources, but I am confused by the huge bid-ask spreads. Right now the Bid is ~87 and the ask is ~104. The market closed around ~89. How do I place an order on this?? The safe bet (Limit order at market value of 104) seems ridiculous since the ask is so high, but a limit order of $89 seems hopeless. Has anyone bought VSS recently or is there some other resources I need to be reading about that I am missing? Thanks for the help!
Not to pick on you, specificially, but more-and-more I'm having difficulty in the way people are enamoured with ETFs and don't know what they are buying. This is especially true when you consider (1) a Vanguard Admiral Share (the same fund, by the way) costs the same and (2) without all of the added baggage of ETFs - and that includes the "trading" aspect of it all.

OK, just my $0.02.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

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Boglenaut
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by Boglenaut » Fri Feb 10, 2012 9:16 am

My first post here ever was to ask this exact same question.

I had VSS for a while, but when I simplified to VTIAX (Tot Intl), I sold my VSS ETF as well as VWO (Emerging Markets), FSIVX (Fidelity Developed Intl), and EWC (Canada).

In the end, the premium/discounts, having to set limit amounts, etc really made me prefer the mutual funds. So now I replaced 3 ETFs and 1 MF with 1 MF at the same cost. The ETFs were not worth it compared to the simplicity of MFs.

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by tarnation » Fri Feb 10, 2012 9:20 am

bhouse wrote:Hey Bogleheads,

I recently opened a brokerage account in order to buy the US small cap value ETF (VBR) and the FTSE Ex-US small cap ETF (VSS). However, I am having trouble figuring out what to do when buying VSS. I read all the wiki pages on ordering ETFs as well as many other resources, but I am confused by the huge bid-ask spreads. Right now the Bid is ~87 and the ask is ~104. The market closed around ~89. How do I place an order on this?? The safe bet (Limit order at market value of 104) seems ridiculous since the ask is so high, but a limit order of $89 seems hopeless. Has anyone bought VSS recently or is there some other resources I need to be reading about that I am missing? Thanks for the help!
Better to put orders in when the market is open. After hour trading quotes will have wide spreads like that. Once the market is open, you should see spreads on VSS on the order of 10's of cents.
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actor10
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by actor10 » Fri Feb 10, 2012 9:20 am

bhouse wrote:Hey Bogleheads,

I recently opened a brokerage account in order to buy the US small cap value ETF (VBR) and the FTSE Ex-US small cap ETF (VSS). However, I am having trouble figuring out what to do when buying VSS. I read all the wiki pages on ordering ETFs as well as many other resources, but I am confused by the huge bid-ask spreads. Right now the Bid is ~87 and the ask is ~104. The market closed around ~89. How do I place an order on this?? The safe bet (Limit order at market value of 104) seems ridiculous since the ask is so high, but a limit order of $89 seems hopeless. Has anyone bought VSS recently or is there some other resources I need to be reading about that I am missing? Thanks for the help!
You looked at the spread when the market was closed? If so, don't. Wait until the market opens.

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Boglenaut
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by Boglenaut » Fri Feb 10, 2012 9:23 am

actor10 wrote:
bhouse wrote:Hey Bogleheads,

I recently opened a brokerage account in order to buy the US small cap value ETF (VBR) and the FTSE Ex-US small cap ETF (VSS). However, I am having trouble figuring out what to do when buying VSS. I read all the wiki pages on ordering ETFs as well as many other resources, but I am confused by the huge bid-ask spreads. Right now the Bid is ~87 and the ask is ~104. The market closed around ~89. How do I place an order on this?? The safe bet (Limit order at market value of 104) seems ridiculous since the ask is so high, but a limit order of $89 seems hopeless. Has anyone bought VSS recently or is there some other resources I need to be reading about that I am missing? Thanks for the help!
You looked at the spread when the market was closed? If so, don't. Wait until the market opens.
..and don't use Market Orders (sounds like you know that), especially for low volume ETFs.

bhouse
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by bhouse » Fri Feb 10, 2012 10:05 am

Thanks for the replies all. I am with you on the ETFs vs mutual funds. I would much prefer the funds, but the ER is much higher (especially for these two funds) until you get to admiral shares, and I am still at least 3 years away from having that much (VSS and VBR are a relatively small part of my already small portfolio). Anyway, I realized after posting this that the market hadn't opened, and yes the spreads have normalized now. Thanks!

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by YDNAL » Fri Feb 10, 2012 10:25 am

bhouse wrote:Thanks for the replies all. I am with you on the ETFs vs mutual funds. I would much prefer the funds, but the ER is much higher (especially for these two funds) until you get to admiral shares, and I am still at least 3 years away from having that much (VSS and VBR are a relatively small part of my already small portfolio). Anyway, I realized after posting this that the market hadn't opened, and yes the spreads have normalized now. Thanks!
Sorry, but this goes back to the root of my initial comment about being enamoured with ETFs, etc. I'm begining to see a pattern (regreattably) of ease-in-acquiring STUFF becoming a detrement to a sound investment process.

With limited resources ("relatively small part of already small portfolio"), why would open a brokerage account to own Small Foreign VSS and Small Cap Value VBR when your money should be in CORE investments?

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by Liquid » Fri Feb 10, 2012 10:35 am

bhouse wrote:Thanks for the replies all. I am with you on the ETFs vs mutual funds. I would much prefer the funds, but the ER is much higher (especially for these two funds) until you get to admiral shares, and I am still at least 3 years away from having that much (VSS and VBR are a relatively small part of my already small portfolio). Anyway, I realized after posting this that the market hadn't opened, and yes the spreads have normalized now. Thanks!
3 years of higher ER is really a minor expense on such a small holding.

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by Cash » Fri Feb 10, 2012 10:50 am

YDNAL wrote:
bhouse wrote:Thanks for the replies all. I am with you on the ETFs vs mutual funds. I would much prefer the funds, but the ER is much higher (especially for these two funds) until you get to admiral shares, and I am still at least 3 years away from having that much (VSS and VBR are a relatively small part of my already small portfolio). Anyway, I realized after posting this that the market hadn't opened, and yes the spreads have normalized now. Thanks!
Sorry, but this goes back to the root of my initial comment about being enamoured with ETFs, etc. I'm begining to see a pattern (regreattably) of ease-in-acquiring STUFF becoming a detrement to a sound investment process.

With limited resources ("relatively small part of already small portfolio"), why would open a brokerage account to own Small Foreign VSS and Small Cap Value VBR when your money should be in CORE investments?

Asking Portfolio Questions.
http://www.bogleheads.org/forum/viewtopic.php?t=6212
I take your point about people not knowing what they're doing when buying ETFs. That said, it's not difficult to figure out. I don't, however, see what difference it makes whether you put $10k in the total stock market mutual fund or $8k in VTI, $1k in VSS, and $1k in VBR. Sure, you're using more securities and $1k isn't going to make that much of a difference...but it's still $10k that you're investing, and that the most important thing. So if adding a bit of a tilt makes you more likely to invest, then go for it. At least they're not betting on penny stocks.

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by YDNAL » Fri Feb 10, 2012 11:21 am

Cash wrote:I take your point about people not knowing what they're doing when buying ETFs. That said, it's not difficult to figure out. I don't, however, see what difference it makes whether you put $10k in the total stock market mutual fund or $8k in VTI, $1k in VSS, and $1k in VBR. Sure, you're using more securities and $1k isn't going to make that much of a difference...but it's still $10k that you're investing, and that the most important thing. So if adding a bit of a tilt makes you more likely to invest, then go for it. At least they're not betting on penny stocks.
The "difference" is that you don't own* Total International and Total Bond Market and you are not developing a diversified portfolio and sound investment strategy.

* and if you do own them, then what does $1K represent of Stocks and what does it represent of the total portfolio?

Look, if you care to, you can see my position on Small Caps, Value, and investing in general by going over 9,100 posts.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by bhouse » Fri Feb 10, 2012 12:11 pm

I have done the research and created my investment plan. It includes total stock, total international and total bond, but also some small value tilt. Why would I not start now? It doesn't make sense to me to wait until I have a big enough portfolio that each of vss and vbr would have 10k when I can just start now using ETFs (which are the same as the fund...). Your position on small cap value is irrelevant.

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by YDNAL » Fri Feb 10, 2012 12:53 pm

bhouse wrote:I have done the research and created my investment plan. It includes total stock, total international and total bond, but also some small value tilt. Why would I not start now? It doesn't make sense to me to wait until I have a big enough portfolio that each of vss and vbr would have 10k when I can just start now using ETFs (which are the same as the fund...). Your position on small cap value is irrelevant.
A very interesting and aggressive stand!

Perhaps you will continue research and will "realize" how many things should work.
bhouse wrote:I recently opened a brokerage account in order to buy the US small cap value ETF (VBR) and the FTSE Ex-US small cap ETF (VSS). However, I am having trouble figuring out what to do when buying VSS. I read all the wiki pages on ordering ETFs as well as many other resources, but I am confused by the huge bid-ask spreads. Right now the Bid is ~87 and the ask is ~104. The market closed around ~89.
bhouse wrote:Anyway, I realized after posting this that the market hadn't opened, and yes the spreads have normalized now. Thanks!
Good luck with your investments.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by Cash » Fri Feb 10, 2012 1:39 pm

YDNAL wrote:
Cash wrote:I take your point about people not knowing what they're doing when buying ETFs. That said, it's not difficult to figure out. I don't, however, see what difference it makes whether you put $10k in the total stock market mutual fund or $8k in VTI, $1k in VSS, and $1k in VBR. Sure, you're using more securities and $1k isn't going to make that much of a difference...but it's still $10k that you're investing, and that the most important thing. So if adding a bit of a tilt makes you more likely to invest, then go for it. At least they're not betting on penny stocks.
The "difference" is that you don't own* Total International and Total Bond Market and you are not developing a diversified portfolio and sound investment strategy.

* and if you do own them, then what does $1K represent of Stocks and what does it represent of the total portfolio?

Look, if you care to, you can see my position on Small Caps, Value, and investing in general by going over 9,100 posts.
That completely misses the point. My question was essentially why you think owning a single mutual fund is better than having a more diversified portfolio of ETFs in the same amount. It has nothing to do with your positions on small caps, value, or investing in general. Forgive me for omitting bonds in my 5-second hypothetical...

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by YDNAL » Fri Feb 10, 2012 1:58 pm

Cash wrote:That completely misses the point. My question was essentially why you think owning a single mutual fund is better than having a more diversified portfolio of ETFs in the same amount. It has nothing to do with your positions on small caps, value, or investing in general. Forgive me for omitting bonds in my 5-second hypothetical...
Who said anything about a single fund? All discussions have been about "a portfolio" and sound investment strategy.

The real question is why do you think that VTI+VSS+VBR is "a more diversified portfolio" of ETFs.
Cash wrote:I don't, however, see what difference it makes whether you put $10k in the total stock market mutual fund or $8k in VTI, $1k in VSS, and $1k in VBR.
If you had said VTI+VXUS+BND then we would be talking the same language. It's time to let the beaten horse die a peaceful death.

Good luck with your investments.
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by iceport » Sat Feb 11, 2012 4:26 am

YDNAL wrote:Not to pick on you, specificially, but more-and-more I'm having difficulty in the way people are enamoured with ETFs and don't know what they are buying. This is especially true when you consider (1) a Vanguard Admiral Share (the same fund, by the way) costs the same and (2) without all of the added baggage of ETFs - and that includes the "trading" aspect of it all.

OK, just my $0.02.
You got my hopes up, Landy, only to be dashed on the rocks!

I absolutely hate ETFs and only own 2 of the lousy critters to cut costs. One of them is VSS. So based on your comment, I went running to Vanguard's website, thinking they had created Admiral shares of the FTSE All-World ex-US Small-Cap Index Fund, with the same ER as the stinking ETF.

Much to my dismay, I found this fund (VFSVX) is still only offered in Investor shares, with an ER of 0.55%, a Purchase Fee of 0.75%, and a Redemption Fee of 0.75%.

Even though it means getting down in the mud and getting my hands dirty with an ETF, I'll take the 0.33% ER (and no purchase and redemption fees) of VSS over the much higher costs of VFSVX any day. (And far be it for me to blame the OP for doing the same.)

--Pete
"Discipline matters more than allocation.” ─William Bernstein

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by livesoft » Sat Feb 11, 2012 5:08 am

I think ETFs can be more daunting if you have a poor brokerage account web interface. Nevertheless, if you have 2 cars that you drive regularly, there are probably more differences between your two cars than between the Vanguard mutual fund shares and the ETF shares.
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by blevine » Sat Feb 11, 2012 9:11 am

ETFs are bit different but not at all complicated. Like anything else, you just need to learn how to do it.

The argument of simplicity of # funds and tilting vs not and whether it's worth it for a smaller
(or any) portfolio is a better argument, but there is nothing wrong with ETFs. They have given
small investors the ability to have same ER and avoid purchase fees, like larger investors in Admiral shares.
Isn't that Vanguard's niche, bringing low cost investing to the masses ? They can offer low cost
because they don't have to directly deal with the investor in those shares (assuming you use a broker
other than VBS, and even then, it's not the fund supporting you, it's a separate brokerage company).

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by Cash » Sat Feb 11, 2012 9:53 am

YDNAL wrote:
Cash wrote:That completely misses the point. My question was essentially why you think owning a single mutual fund is better than having a more diversified portfolio of ETFs in the same amount. It has nothing to do with your positions on small caps, value, or investing in general. Forgive me for omitting bonds in my 5-second hypothetical...
Who said anything about a single fund? All discussions have been about "a portfolio" and sound investment strategy.

The real question is why do you think that VTI+VSS+VBR is "a more diversified portfolio" of ETFs.
Cash wrote:I don't, however, see what difference it makes whether you put $10k in the total stock market mutual fund or $8k in VTI, $1k in VSS, and $1k in VBR.
If you had said VTI+VXUS+BND then we would be talking the same language. It's time to let the beaten horse die a peaceful death.

Good luck with your investments.
I generally believe in letting the horse die, but since it was revived anyway, I thought I'd clarify further :). You said
YDNAL wrote:(1) a Vanguard Admiral Share (the same fund, by the way) costs the same and (2) without all of the added baggage of ETFs - and that includes the "trading" aspect of it all
OK, you like mutual funds more than ETFs. Great, good for you, not an uncommon position here. But then we find out that the OP doesn't have enough in his/her account to get admiral shares. But instead of accepting the OP's desire to have his/her ideal portfolio allocation using ETFs, you further berate the OP for having VSS and VBR:
YDNAL wrote: Sorry, but this goes back to the root of my initial comment about being enamoured with ETFs, etc. I'm begining to see a pattern (regreattably) of ease-in-acquiring STUFF becoming a detrement to a sound investment process.

With limited resources ("relatively small part of already small portfolio"), why would open a brokerage account to own Small Foreign VSS and Small Cap Value VBR when your money should be in CORE investments?
The only sense I can make from your comment is that you think it's better to have a less-than-ideal portfolio allocation using admiral funds than to have an ideal allocation using ETFs. The question, therefore, was why you thought that to be the case. Perhaps you're dodging the question because don't have a logical reason for your position, but that's not the OP's fault. The OP's clarification
bhouse wrote:I have done the research and created my investment plan. It includes total stock, total international and total bond, but also some small value tilt. Why would I not start now? It doesn't make sense to me to wait until I have a big enough portfolio that each of vss and vbr would have 10k when I can just start now using ETFs (which are the same as the fund...). Your position on small cap value is irrelevant.
was met with another flippant (non)response.

So yes, I normally let the horse die, but I wanted to clarify that, especially since you're one of the more respected senior members of the forum and the question was legitimate.

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by Sammy_M » Sat Feb 11, 2012 10:55 am

bhouse wrote:I recently opened a brokerage account in order to buy the US small cap value ETF (VBR) and the FTSE Ex-US small cap ETF (VSS). However, I am having trouble figuring out what to do when buying VSS. I read all the wiki pages on ordering ETFs as well as many other resources, but I am confused by the huge bid-ask spreads. Right now the Bid is ~87 and the ask is ~104. The market closed around ~89. How do I place an order on this?? The safe bet (Limit order at market value of 104) seems ridiculous since the ask is so high, but a limit order of $89 seems hopeless. Has anyone bought VSS recently or is there some other resources I need to be reading about that I am missing? Thanks for the help!
Here what I do. Wait until the market is open for half an hour at least. Go to http://batstrading.com/. Go to the Book Viewer box in the bottom right. Type in VSS. Look at the bids and asks that are not just 100 shares. Set your limit order a little inside the current (non-100 share) Bids. Wait.

Not willing to miss the chance to buy? Then set (2*ask price + 1*bid price)/3 as your limit order. If it doesn't fill then don't worry. You were offering a fair price.

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by iceport » Sat Feb 11, 2012 12:21 pm

livesoft wrote:I think ETFs can be more daunting if you have a poor brokerage account web interface. Nevertheless, if you have 2 cars that you drive regularly, there are probably more differences between your two cars than between the Vanguard mutual fund shares and the ETF shares.
Sure, if one of them is carbureted, requires that you open the hood and fiddle with it every time you want to start it, and the doors only open between 9 am and 4 pm ET. :roll:

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by baw703916 » Sat Feb 11, 2012 12:46 pm

petrico wrote:
livesoft wrote:I think ETFs can be more daunting if you have a poor brokerage account web interface. Nevertheless, if you have 2 cars that you drive regularly, there are probably more differences between your two cars than between the Vanguard mutual fund shares and the ETF shares.
Sure, if one of them is carbureted, requires that you open the hood and fiddle with it every time you want to start it, and the doors only open between 9 am and 4 pm ET. :roll:

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If, as your analogy implies, buying/selling investments = driving your car, then the Boglehead approach is to drive your car no more than a couple times a year.

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by livesoft » Sat Feb 11, 2012 12:52 pm

That is not quite true. If one is in the accumulation phase, then one probably makes more than 2 buy transactions per year.

The two car analogy could be developed a little more though. Suppose one is going to work every day. Your daily driver might be a Prius, but you might want to take your Suburban or Expedition when you are towing your boat on vacation. These 2 vehicles have different expense ratios.
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by Liquid » Sat Feb 11, 2012 2:04 pm

petrico wrote: You got my hopes up, Landy, only to be dashed on the rocks!

I absolutely hate ETFs and only own 2 of the lousy critters to cut costs. One of them is VSS. So based on your comment, I went running to Vanguard's website, thinking they had created Admiral shares of the FTSE All-World ex-US Small-Cap Index Fund, with the same ER as the stinking ETF.

Much to my dismay, I found this fund (VFSVX) is still only offered in Investor shares, with an ER of 0.55%, a Purchase Fee of 0.75%, and a Redemption Fee of 0.75%.

Even though it means getting down in the mud and getting my hands dirty with an ETF, I'll take the 0.33% ER (and no purchase and redemption fees) of VSS over the much higher costs of VFSVX any day. (And far be it for me to blame the OP for doing the same.)

--Pete
I suspect that the 0.75%/0.75% fees are baked into the spread and other market maker arbitrage schemes inherent in the ETF pricing.

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by iceport » Sat Feb 11, 2012 2:11 pm

livesoft wrote:That is not quite true. If one is in the accumulation phase, then one probably makes more than 2 buy transactions per year.

The two car analogy could be developed a little more though. Suppose one is going to work every day. Your daily driver might be a Prius, but you might want to take your Suburban or Expedition when you are towing your boat on vacation. These 2 vehicles have different expense ratios.
One problem is I don't own a boat. So the daily driver would be my preference for vacations as well -- why waste gas? But one aspect of your expanded analogy holds true: I pretty much have to take vacation time to use the ETF-vehicle.

8-)

--Pete
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by grabiner » Sat Feb 11, 2012 9:37 pm

Sammy_M wrote:Here what I do. Wait until the market is open for half an hour at least. Go to http://batstrading.com/. Go to the Book Viewer box in the bottom right. Type in VSS. Look at the bids and asks that are not just 100 shares. Set your limit order a little inside the current (non-100 share) Bids. Wait.
This doesn't necessarily work well; BATS is only one of many exchanges, and at least when I have traded VSS, it rarely has the best prices. It's common to have a displayed bid of $79.90 and ask of $80.10 (on NYSE ARCA, usually), and have BATS display a bid of $79 and an ask of $80.80.
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by grabiner » Sat Feb 11, 2012 9:44 pm

petrico wrote:
livesoft wrote:That is not quite true. If one is in the accumulation phase, then one probably makes more than 2 buy transactions per year.

The two car analogy could be developed a little more though. Suppose one is going to work every day. Your daily driver might be a Prius, but you might want to take your Suburban or Expedition when you are towing your boat on vacation. These 2 vehicles have different expense ratios.
One problem is I don't own a boat. So the daily driver would be my preference for vacations as well -- why waste gas? But one aspect of your expanded analogy holds true: I pretty much have to take vacation time to use the ETF-vehicle.
And that's my situation as well. Therefore, I use the ETF vehicle when my load can only fit in the vehicle (I hold EEMS, emerging markets small-cap, which is not available as an index mutual fund outside of DFA), or fits much better in the vehicle (saving the 0.33% expenses on my entire VSS holding, and 0.1% on the spread rather than a 0.75% purchase fee, is worth the 20 minutes it usually takes to make a trade, and the lost work time).
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by Sammy_M » Sat Feb 11, 2012 10:04 pm

grabiner wrote:
Sammy_M wrote:Here what I do. Wait until the market is open for half an hour at least. Go to http://batstrading.com/. Go to the Book Viewer box in the bottom right. Type in VSS. Look at the bids and asks that are not just 100 shares. Set your limit order a little inside the current (non-100 share) Bids. Wait.
This doesn't necessarily work well; BATS is only one of many exchanges, and at least when I have traded VSS, it rarely has the best prices. It's common to have a displayed bid of $79.90 and ask of $80.10 (on NYSE ARCA, usually), and have BATS display a bid of $79 and an ask of $80.80.
In this case, my order might take longer to fill because I'm bidding too low, or it might not fill at all and I lose my chance.

Can you view NYSE ARCA book somewhere for free?

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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by grabiner » Sat Feb 11, 2012 10:40 pm

Sammy_M wrote:
grabiner wrote:
Sammy_M wrote:Here what I do. Wait until the market is open for half an hour at least. Go to http://batstrading.com/. Go to the Book Viewer box in the bottom right. Type in VSS. Look at the bids and asks that are not just 100 shares. Set your limit order a little inside the current (non-100 share) Bids. Wait.
This doesn't necessarily work well; BATS is only one of many exchanges, and at least when I have traded VSS, it rarely has the best prices. It's common to have a displayed bid of $79.90 and ask of $80.10 (on NYSE ARCA, usually), and have BATS display a bid of $79 and an ask of $80.80.
In this case, my order might take longer to fill because I'm bidding too low, or it might not fill at all and I lose my chance.

Can you view NYSE ARCA book somewhere for free?
It depends on your brokerage. I have a TDAmeritrade account through my HSA (and I buy ETFs there as well), and I can use that to look at the best quote on each market for free. Paying for full level 2 stock quotes isn't worthwhile given the amount of trading I do.

However, even with Vanguard, you can see the national best bid and offer, and the amount available. If there is a bid for 300 shares at $79.90 and an ask for 500 shares at $80.10, that's usually all you need to know unless you are trying to buy more than 500 shares and would be willing to accept the ask.
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by grabiner » Sun Feb 12, 2012 11:20 pm

Liquid wrote:I suspect that the 0.75%/0.75% fees are baked into the spread and other market maker arbitrage schemes inherent in the ETF pricing.
Vanguard charges fees to compensate shareholders for the cost of buying and selling stock. If shareholders buy $2M and sell $1M (or vice versa), then Vanguard has to buy (or sell) $1M worth of stock, and given the transaction costs for internationasl small-cap stocks, it won't wind up with $1M worth. If it winds up with $980K worth of stock, then a fee around 0.67% would mean that existing shareholders don't suffer.

In contrast, when you buy or sell an ETF, you don't usually force anyone to buy or sell stock. A market maker can both buy and sell, and can set the market to equalize buying and selling. If a market maker manages to offer a 0.20% spread and buy and sell $10M, he has made a $20K profit. If he buys $11M and sells $10M, he has made $22K for making the market, and still has a $2K profit when he converts the $1M he bought into a creation unit. In addition, there are multiple market makers, and non-market-making traders as well, so the spread you get is often less than what any one market maker will offer.
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by baw703916 » Mon Feb 13, 2012 12:23 am

What the higher transaction costs will probably mean, though, is that the market price of the ETF may deviate more from its NAV, because it won't be as easy to create or redeem creation units of the ETF. That may be good or bad, depending on what you are doing relative to the current market conditions.
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by nisiprius » Mon Feb 13, 2012 6:59 am

To get back to bhouse's question, it sounds as if it was just an issue of looking at it after hours. Unfortunately, my brokerage does not mention anything until you're several screens in and close to being committed. At that point, a warning pops up saying it's after-hours and trading after-hours is risky and are you really sure you want to do it?

The way I know is that I made a similar mistake.

That's another little thing about ETFs. Effectively you need to place your trade during business hours, and not too close to start or end of trade. And it takes a strong-willed person to just do it and not check several times to try to see how prices are trending. If one is employed during business hours, the amount of time and attention it takes to place an ETF order seems to me to be discourteous to one's employer.

I'm not suggesting that it's financially advantageous to trade mutual funds and be stuck with whatever the closing prices happened to be, but it is definitely convenient to place an order any time you like, and psychologically helpful to know that, good or bad, the time you place it isn't going to matter.
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by tfb » Mon Feb 13, 2012 11:12 am

nisiprius wrote:I'm not suggesting that it's financially advantageous to trade mutual funds and be stuck with whatever the closing prices happened to be, but it is definitely convenient to place an order any time you like, and psychologically helpful to know that, good or bad, the time you place it isn't going to matter.
You can always place a limit order after hours. I've done that many times. Some of them were executed at the open on a trading day. The price happened to be close to the lowest during the day. Not a problem. In fact, an order I placed yesterday (Sunday) was executed today at 55.89 a share. The low and high today up to now is 55.74 - 56.02. My price is right in the middle. I placed an order and forgot about it, just as I would with a mutual fund. The time I placed the order didn't matter. Maybe it would matter if someone really wants to catch the lowest price of the day. But if you were going to resign to getting an unknown price at the close anyway, getting a price you think is reasonable is just fine.
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Re: Help buying VSS (FTSE Ex-US small cap ETF)

Post by livesoft » Mon Feb 13, 2012 1:44 pm

Presumably your order was not an order to sell? ;)
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