VT Portfolio Composition File vs total holdings

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Ferdinand2014
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VT Portfolio Composition File vs total holdings

Post by Ferdinand2014 »

Why does VT (Vanguard Total World stock ETF) lists 1,397 total stocks in its portfolio creation file to make or redeem a creation unit, but lists 8,776 total stocks for holdings? I thought they should be the same?

https://investor.vanguard.com/etf/profi ... lio/VT/pcf

https://investor.vanguard.com/etf/profile/portfolio/vt

I noticed this only because Fidelity lists 1,397 holdings for VT when you research ETF’s.

https://screener.fidelity.com/ftgw/etf/ ... symbols=VT
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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arcticpineapplecorp.
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Re: VT Portfolio Composition File vs total holdings

Post by arcticpineapplecorp. »

i think you're comparing the institutional version rather than the retail version.
Institutional investors authorized to create Vanguard ETF® shares for the marketplace were required to deposit the following securities with Vanguard to purchase a creation unit of this ETF fund on the date specified. An authorized participant redeeming shared of this ETF fund on the same date would receive the same securities in the amounts shown.
the retail version has more stocks. the institutional version has to have enough to replicate the index.

not sure why fidelity lists less stocks for VT lists the institutional version, perhaps it can be screened for the retail version?

institutional funds often use creation units (my 457b has units, not shares).
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. get a plan: www.bogleheads.org/wiki/Investment_policy_statement
harikaried
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Re: VT Portfolio Composition File vs total holdings

Post by harikaried »

Looks like this is related to the internal workings of ETFs' creation units. This was previously discussed viewtopic.php?p=3954170#p3954170

Here's an article and video about the creation and redemption mechanism https://www.etf.com/etf-education-cente ... -mechanism

I guess the holdings outside of the creation unit are traded separately by the fund manager? :confused
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Ferdinand2014
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Re: VT Portfolio Composition File vs total holdings

Post by Ferdinand2014 »

arcticpineapplecorp. wrote: Wed Sep 16, 2020 3:41 pm i think you're comparing the institutional version rather than the retail version.
Institutional investors authorized to create Vanguard ETF® shares for the marketplace were required to deposit the following securities with Vanguard to purchase a creation unit of this ETF fund on the date specified. An authorized participant redeeming shared of this ETF fund on the same date would receive the same securities in the amounts shown.
the retail version has more stocks. the institutional version has to have enough to replicate the index.

not sure why fidelity lists less stocks for VT lists the institutional version, perhaps it can be screened for the retail version?

institutional funds often use creation units (my 457b has units, not shares).
I was under the impression that when they were referring to institutional, they were simply referring to the AP not an institutional version of the fund. If what you say is true, it begs the question and supports the silliness of VT owning 8,700 different sticks when 1,397 gives you (I assume) the same return. What is the ticker symbol of the institutional version? I assume it can’t be the same.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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arcticpineapplecorp.
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Re: VT Portfolio Composition File vs total holdings

Post by arcticpineapplecorp. »

Ferdinand2014 wrote: Thu Sep 17, 2020 6:56 am
arcticpineapplecorp. wrote: Wed Sep 16, 2020 3:41 pm i think you're comparing the institutional version rather than the retail version.
Institutional investors authorized to create Vanguard ETF® shares for the marketplace were required to deposit the following securities with Vanguard to purchase a creation unit of this ETF fund on the date specified. An authorized participant redeeming shared of this ETF fund on the same date would receive the same securities in the amounts shown.
the retail version has more stocks. the institutional version has to have enough to replicate the index.

not sure why fidelity lists less stocks for VT lists the institutional version, perhaps it can be screened for the retail version?

institutional funds often use creation units (my 457b has units, not shares).
I was under the impression that when they were referring to institutional, they were simply referring to the AP not an institutional version of the fund. If what you say is true, it begs the question and supports the silliness of VT owning 8,700 different sticks when 1,397 gives you (I assume) the same return. What is the ticker symbol of the institutional version? I assume it can’t be the same.
vt.iv
https://institutional.vanguard.com/web/ ... ReturnsNAV
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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Ferdinand2014
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Re: VT Portfolio Composition File vs total holdings

Post by Ferdinand2014 »

harikaried wrote: Wed Sep 16, 2020 5:01 pm Looks like this is related to the internal workings of ETFs' creation units. This was previously discussed viewtopic.php?p=3954170#p3954170

Here's an article and video about the creation and redemption mechanism https://www.etf.com/etf-education-cente ... -mechanism

I guess the holdings outside of the creation unit are traded separately by the fund manager? :confused
So if what the links you provided suggest that there is only 1 version of VT and the creation unit is in fact 1,397 or so different stocks, then how does vanguard account for the rest of the listed holdings totaling over 8,700? I am just trying to understand how the process works when you buy and sell shares of VT on the open market, I thought the price would generally be based on the underlying holdings in the creation units and any discrepancies would be arbitraged by the AP with buying and redeeming creation units with Vanguard. So then how are the other 7,400 stocks managed or accounted for? I fully realize it won’t make much of a difference in the performance given the incredibly small proportion these stocks represent, I just want to understand the process.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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Ferdinand2014
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Re: VT Portfolio Composition File vs total holdings

Post by Ferdinand2014 »

arcticpineapplecorp. wrote: Thu Sep 17, 2020 7:09 am
Ferdinand2014 wrote: Thu Sep 17, 2020 6:56 am
arcticpineapplecorp. wrote: Wed Sep 16, 2020 3:41 pm i think you're comparing the institutional version rather than the retail version.
Institutional investors authorized to create Vanguard ETF® shares for the marketplace were required to deposit the following securities with Vanguard to purchase a creation unit of this ETF fund on the date specified. An authorized participant redeeming shared of this ETF fund on the same date would receive the same securities in the amounts shown.
the retail version has more stocks. the institutional version has to have enough to replicate the index.

not sure why fidelity lists less stocks for VT lists the institutional version, perhaps it can be screened for the retail version?

institutional funds often use creation units (my 457b has units, not shares).
I was under the impression that when they were referring to institutional, they were simply referring to the AP not an institutional version of the fund. If what you say is true, it begs the question and supports the silliness of VT owning 8,700 different sticks when 1,397 gives you (I assume) the same return. What is the ticker symbol of the institutional version? I assume it can’t be the same.
vt.iv
https://institutional.vanguard.com/web/ ... ReturnsNAV
So the institutional version holds 8,776 stocks. Now I’m very confused.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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Ferdinand2014
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Re: VT Portfolio Composition File vs total holdings

Post by Ferdinand2014 »

So from what I can sort out, there is only 1 version of VT. The portfolio composition unit (PCF) appears to be the most liquid and representative portion of VT used for redeeming and forming creation units by AP's in order to arbitrage away any NAV to market price difference. In this way it is like any ETF. The difference form the official holdings of 8,776 and 1,397 in a PCF is the confusing part. Is this a unique to Vanguard approach since the mutual fund is simply a share class of the ETF and the less liquid smaller stocks not represented in the ETF PCF can be held in some outsized portion on the mutual fund side? VXUS (7400 vs 1246) and VTI (3500 vs 1541) seem to do the same thing. Although VOO PCF is almost the same as the holdings. Looking at other ETF's like any iShares funds, the PCF seems to be the same as the listed holdings.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
MrJedi
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Re: VT Portfolio Composition File vs total holdings

Post by MrJedi »

Here's another relevant article:
https://www.fidelity.com/learning-cente ... n-your-etf

I presume large swaths of smaller, less liquid stocks are grouped together and that explains most of the difference between number of baskets vs number of total stocks.
Topic Author
Ferdinand2014
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Re: VT Portfolio Composition File vs total holdings

Post by Ferdinand2014 »

harikaried wrote: Wed Sep 16, 2020 5:01 pm Looks like this is related to the internal workings of ETFs' creation units. This was previously discussed viewtopic.php?p=3954170#p3954170

Here's an article and video about the creation and redemption mechanism https://www.etf.com/etf-education-cente ... -mechanism

I guess the holdings outside of the creation unit are traded separately by the fund manager? :confused
That is the only explanation I can see, but when you buy or sell VT on the open market it seems you are only buying or selling within the PCF and bundled creation units by the AP's, not the larger official holdings.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
Topic Author
Ferdinand2014
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Joined: Mon Dec 17, 2018 6:49 pm

Re: VT Portfolio Composition File vs total holdings

Post by Ferdinand2014 »

MrJedi wrote: Thu Sep 17, 2020 8:34 am Here's another relevant article:
https://www.fidelity.com/learning-cente ... n-your-etf

I presume large swaths of smaller, less liquid stocks are grouped together and that explains most of the difference between number of baskets vs number of total stocks.
Thanks for the link.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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