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BIV fell 2.4% today. Why?

Posted: Tue Mar 17, 2020 3:03 pm
by 50ismygoal
Why would the Intermediate Term Bond Index ETF fall 2.4%? That’s a large one day drop for this fund.

Re: BIV fell 2.4% today. Why?

Posted: Tue Mar 17, 2020 3:04 pm
by Corsair
I assume people continued to move to cash / MMF or bought stocks.

Re: BIV fell 2.4% today. Why?

Posted: Tue Mar 17, 2020 3:10 pm
by MoneyMarathon
Short duration corporate bond funds (VCSH, HYG, JNK) taking credit risk are mostly unchanged today, with slight gains.

However, intermediate duration yields went up. So the price went down (looking at IEF or VGIT, intermediate treasury funds).

The selling in treasury bonds today makes sense in the context of stocks being up for the day.

(For most of us, though, this is literally "the noise.")

Re: BIV fell 2.4% today. Why?

Posted: Tue Mar 17, 2020 3:14 pm
by stocknoob4111
10 year Treasury yields went up 37%, that is also why... the 10Y is almost hitting 1% now, I am not quite sure why Intermediate and Long term treasury yields are suddenly skyrocketing... could it be inflation expectations?

Re: BIV fell 2.4% today. Why?

Posted: Tue Mar 17, 2020 3:21 pm
by birdog
VGIT (Int Term Treas) fell 1.6% today too. Surprisingly, VTEB (Tax Exempt) held up better with only a .6% drop today. VTEB has me a bit worried, tho.

BIV even YTD.
VTEB down 4.5% YTD.
VGIT up 4.6% YTD.


I'm 85-15 with slightly more than half bond holdings in BIV and slightly less than half in VTEB. I'd feel better at 2/3 and 1/3, respectively.

Re: BIV fell 2.4% today. Why?

Posted: Tue Mar 17, 2020 3:22 pm
by Scooter57
It's an ETF. When the going gets rough, ETF prices get flaky. This happens whenever there are sharp moves in the market and is one reason why I am willing to pay a few basis points more to be in a mutual fund.

Re: BIV fell 2.4% today. Why?

Posted: Tue Mar 17, 2020 3:52 pm
by rascott
Scooter57 wrote: Tue Mar 17, 2020 3:22 pm It's an ETF. When the going gets rough, ETF prices get flaky. This happens whenever there are sharp moves in the market and is one reason why I am willing to pay a few basis points more to be in a mutual fund.
They all find their way back to NAV quite quickly, so rather irrelevant unless you HAVE to buy/ sell in the middle of a very volatile trading day.

Re: BIV fell 2.4% today. Why?

Posted: Tue Mar 17, 2020 4:25 pm
by jdilla1107
Scooter57 wrote: Tue Mar 17, 2020 3:22 pm It's an ETF. When the going gets rough, ETF prices get flaky. This happens whenever there are sharp moves in the market and is one reason why I am willing to pay a few basis points more to be in a mutual fund.
This is not the reason at all. Intermediate bonds were just down today.

Also, mutual funds have also have a liquidity issue; it's just hidden from you. If enough people sell the mutual fund, the fund needs to sell securities into a possibly illiquid market, affecting all share holders. With an ETF, only the seller of the ETF is affected.

Re: BIV fell 2.4% today. Why?

Posted: Tue Mar 17, 2020 5:00 pm
by Scooter57
jdilla1107 wrote: Tue Mar 17, 2020 4:25 pm
Scooter57 wrote: Tue Mar 17, 2020 3:22 pm It's an ETF. When the going gets rough, ETF prices get flaky. This happens whenever there are sharp moves in the market and is one reason why I am willing to pay a few basis points more to be in a mutual fund.
This is not the reason at all. Intermediate bonds were just down today.

Also, mutual funds have also have a liquidity issue; it's just hidden from you. If enough people sell the mutual fund, the fund needs to sell securities into a possibly illiquid market, affecting all share holders. With an ETF, only the seller of the ETF is affected.
Sorry, but you are wrong here. The spread on ETFs can get very out of synch with the price of the underlying securities when the underlying securities are not illiquid, just because there are not as many buyers of the ETF shares as there are sellers. I recall one intense day when I was till learning about investing by observing various different stocks and funds, the price of the equal weighted S&P500 ETF, RSP, dropped 50% and was completely out of line with what happened to the S&P500. I would have bought some except, that as always happened with Vanguard at times like that, the website was dead in the water and it was impossible to complete a trade. Eventually these imbalances do straighten themselves out, but it is one more complication when you buy or sell and ETF that I prefer not to have to deal with.

Re: BIV fell 2.4% today. Why?

Posted: Tue Mar 17, 2020 7:27 pm
by jdilla1107
Scooter57 wrote: Tue Mar 17, 2020 5:00 pm
jdilla1107 wrote: Tue Mar 17, 2020 4:25 pm
Scooter57 wrote: Tue Mar 17, 2020 3:22 pm It's an ETF. When the going gets rough, ETF prices get flaky. This happens whenever there are sharp moves in the market and is one reason why I am willing to pay a few basis points more to be in a mutual fund.
This is not the reason at all. Intermediate bonds were just down today.

Also, mutual funds have also have a liquidity issue; it's just hidden from you. If enough people sell the mutual fund, the fund needs to sell securities into a possibly illiquid market, affecting all share holders. With an ETF, only the seller of the ETF is affected.
Sorry, but you are wrong here. The spread on ETFs can get very out of synch with the price of the underlying securities when the underlying securities are not illiquid, just because there are not as many buyers of the ETF shares as there are sellers. I recall one intense day when I was till learning about investing by observing various different stocks and funds, the price of the equal weighted S&P500 ETF, RSP, dropped 50% and was completely out of line with what happened to the S&P500. I would have bought some except, that as always happened with Vanguard at times like that, the website was dead in the water and it was impossible to complete a trade. Eventually these imbalances do straighten themselves out, but it is one more complication when you buy or sell and ETF that I prefer not to have to deal with.
I never said ETFs can't get out of sync with their holdings. I said mutual funds can have a problem with liquidity too. I also said that at least the ETF liquidity problem is limited to the people who are currently buying and selling. Crappy little mutual funds also have execution problems that affect everyone in the fund, regardless of whether they are buying or selling. There are countless bad mutual funds that drift from their indexes and have all sorts of inefficient tax distributions.

It's just as important to hold widely held mutual funds as it is to hold etfs with good liquidity. Saying that "I only hold mutual funds and therefore avoid all liquidity problems in the market", is simply unsophisticated thinking.