Today the S&P was up and VOO was down

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owenmia
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Today the S&P was up and VOO was down

Post by owenmia »

How can that be?
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Cheez-It Guy
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Re: Today the S&P was up and VOO was down

Post by Cheez-It Guy »

Incorrect. Both were up at close.

EDIT: Well, now I see that the topic and content has been changed. Disregard.
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owenmia
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Re: Today the S&P was up and VOO was down

Post by owenmia »

Sorry, I meant sp500 and VOO.
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willthrill81
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Re: Today the S&P was up and VOO was down

Post by willthrill81 »

So was SPY, and by the same amount.

Did the funds pay a dividend?
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Re: Today the S&P was up and VOO was down

Post by livesoft »

Let's just assume it was true. VOO is a specially packaged version of the collection of stocks in the S&P500. People could just not like the packaging which they may find unattractive or displeasing. That alone could be the cause of small differences. Or maybe it's not the packaging, but the comparison to yesterday's closing price which was affected. There are so many things going on that differences are expected. Get used to it. Take advantage of it. But ask about it or worry about it? Don't do that. :)
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owenmia
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Re: Today the S&P was up and VOO was down

Post by owenmia »

Not sure but the s&p was only up .o64% and VOO was only down .04% so the difference is small just seemed stark because one is up and one down.
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owenmia
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Re: Today the S&P was up and VOO was down

Post by owenmia »

I like asking, it’s interesting.

At least I am no longer buying $50,000 in bonds thinking I am going to earn the coupon rate.
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Phineas J. Whoopee
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Re: Today the S&P was up and VOO was down

Post by Phineas J. Whoopee »

By my web reading, the one was all but unchanged in a slightly upward direction, and the other all but unchanged the other way. ETFs have their own bid / ask system, and won't precisely track their indexes day to day. Over longer periods of time it can be expected to be very close, less its expense ratio. Investors in it will track slightly lower due to transaction costs.

Once it's posted, usually later in the evening, you can see what happened to the Vanguard S&P 500 ETF, VOO, net asset value. That may give you a better idea. Looking at the page as it stands right now, still with yesterday's data, it shows a three cent discount.

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alex_686
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Re: Today the S&P was up and VOO was down

Post by alex_686 »

The S&P is done in the imaginary world of a spreadsheet.

VOO actually has to contend with closing its trading books. End if day issues. Imbalances can cause temporary issues at the end if day. Particular on a Friday, month end, or before a weekend.

This will all go away with the opening bell on Monday.

And as somebody who has struck a NAV for a mutual fund, let me tell you that they have to struggle with most of the same issues.
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Lee_WSP
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Re: Today the S&P was up and VOO was down

Post by Lee_WSP »

It is an ETF, it can trade at a premium or discount to the NAV.
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Re: Today the S&P was up and VOO was down

Post by nisiprius »

Imagine that you have a pair of men's size 9 hiking boots and woman's X-small fleece jacket, each bought for $100, from a store that has a policy that says "return at any time for a full refund." Because of the store policy, each item is worth $100. That's the net asset value, or NAV, of the holdings.

A mutual fund is like a shopping bag containing two loose items. You can bring them back to the store and get $200.

An ETF is like a sealed Lexan box containing the two items. The store says "Sorry, we'll take back the items separately, but we can't take them sealed in a Lexan box, we have no way to restock them."

So you go to a marketplace.

Everybody can see what's in the Lexan box and agrees that the net asset value of the box is $200. But in order to get money for them, you have to find one specific buyer who is willing to buy your box with those two particular items in it. Making the ETF analogy, yes, there is a way to open the box and get the items out, and take them to the store and get $200 for them. But it is a complicated process that can be done only by "authorized participants." They in fact have the obligation to buy and sell the boxes on the market so as to keep the market price of the box close to the NAV, but it is not perfect or instantaneous.

At most times, you can find a buyer who's willing to buy your box for very close to the $200 NAV, but not always. When things are busy and stressed, the first buyer you find might say "Look, I already bought 200,000 boxes just like yours today, and we have as many in inventory as we need. I can only afford to pay you $190. Yes, I agree that the box is worth $200 and I wish I could pay you that. I wish you luck finding a buyer at that price, or some back tomorrow after the authorized participants have done their thing and maybe I can do better then."

In short, in an ETF, the market price does not exactly track the NAV, and you can see this in most charts as well as in performance data. Here's a junk bond ETF in which you can see that the tracking is approximate:

Image

In VOO, on most of this chart, you can't even see that there are two separate lines, but nevertheless, notice that over the time period shown, the NAV gained 16.97% but the actual market price only gained 16.93%. Much more "interesting" is that there were two occasions on which there seems to have been a glitch, but it was quickly corrected.

Image
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Re: Today the S&P was up and VOO was down

Post by abuss368 »

Was a dividend paid?
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coingaroo
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Re: Today the S&P was up and VOO was down

Post by coingaroo »

The VOO is one of the largest ETFs in the world, with market makers and hedge funds arbitrating it against its underlying value.

A 0.5% difference will not occur out of arbiragable opportunities when there is liquidity in the market (and there is).

Market makers will arbitrage for 1/5th that difference, if not even less.

The cause is almost certainly implementation differences, like Vanguard’s proprietary tax optimisation strategies, or simply a delay in adding or removing stocks versus the underlying S&P 500 index.

For example, you can see there are some small composition differences in Vanguard’s fund versus the index: https://investor.vanguard.com/mutual-fu ... file/VFINX

Don’t fret it.VOO will not be the same as SPY, but it will be very very close.
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