VOO vs VUSD

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Topic Author
Neuralgia
Posts: 45
Joined: Tue Mar 23, 2021 5:26 pm

VOO vs VUSD

Post by Neuralgia »

So quick question.

Both Vanguard. Both follow the S&P500. Both in USD.

Why there's a difference in the daily results?

For example, TODAY VOO is up +1.41, but VUSD is up +1.17.

Am I missing something?
starboi
Posts: 129
Joined: Fri Apr 23, 2021 11:33 am

Re: VOO vs VUSD

Post by starboi »

They trade on different exchanges?
TedSwippet
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Location: UK

Re: VOO vs VUSD

Post by TedSwippet »

starboi wrote: Tue Jul 20, 2021 5:14 pm They trade on different exchanges?
Exactly.

VOO's daily change, from open to close price, tells you what the S&P 500 stocks did between 2.30pm and 9.30pm UTC (NYSE hours). VUSD's tells you what these same stocks did between 8am and 4.30pm UTC (LSE hours). The offset start and end times mean you cannot expect these to match across a single day.

A rise or fall between 4.30pm and 9.30pm UTC will show in VOO's closing price, but not VUSD's, because it has already closed. It will of course show up in VUSD's price at the next day's open (along with anything else that has happened in the meantime).
Last edited by TedSwippet on Wed Jul 21, 2021 11:14 am, edited 2 times in total.
Topic Author
Neuralgia
Posts: 45
Joined: Tue Mar 23, 2021 5:26 pm

Re: VOO vs VUSD

Post by Neuralgia »

Thank you for your explanation.

Long term they should behave exactly the same, ¿right?
TedSwippet
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Location: UK

Re: VOO vs VUSD

Post by TedSwippet »

Neuralgia wrote: Tue Jul 20, 2021 6:37 pm Long term they should behave exactly the same, ¿right?
Right. The chart linked below shows the five-year performance of VOO and VUSD. At this scale there is no discernible difference.

Five year comparison of VOO:NYSERCA and VUSD:LON

If you switch the above to the five day comparison, you can see how the offset but overlapping trading hours causes the daily percentage change discontinuities across these two ETFs.
User avatar
Maple
Posts: 97
Joined: Fri Aug 07, 2015 11:46 pm

Re: VOO vs VUSD

Post by Maple »

TedSwippet wrote: Wed Jul 21, 2021 2:43 am
Neuralgia wrote: Tue Jul 20, 2021 6:37 pm Long term they should behave exactly the same, ¿right?
Right. The chart linked below shows the five-year performance of VOO and VUSD. At this scale there is no discernible difference.

Five year comparison of VOO:NYSERCA and VUSD:LON

If you switch the above to the five day comparison, you can see how the offset but overlapping trading hours causes the daily percentage change discontinuities across these two ETFs.
Ted's explanation is 99+% correct.

There will be a small expected performance difference, visible in the linked chart as 0.89% (combined theoretical expected difference with some market noise), due to differing tax treatment of distributions. We expect the annual published return difference to be:

S&P500 dividend yield * 15%

Over the near recent history (~5 years), S&P 500 yields ~2%. So, the annual expected difference in returns is 0.3%. How this ultimately applies to an individuals tax circumstance and risk tolerance, varies.
TedSwippet
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Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: VOO vs VUSD

Post by TedSwippet »

Maple wrote: Sat Jul 24, 2021 10:58 pm There will be a small expected performance difference, visible in the linked chart as 0.89% (combined theoretical expected difference with some market noise), due to differing tax treatment of distributions. We expect the annual published return difference to be:

S&P500 dividend yield * 15%

Over the near recent history (~5 years), S&P 500 yields ~2%. So, the annual expected difference in returns is 0.3%. How this ultimately applies to an individuals tax circumstance and risk tolerance, varies.
Right. The Yahoo chart apparently shows only the NAV, not total return (that is, the chart appears to be exclusive of the effect of dividends). A chunk of whatever the current difference is in the five-year chart will come from the market change between 4.30pm UTC (LSE close) and 9.30pm UTC (NYSE close) on the final trading day shown, and so is not long-term difference.

For clarity: The topic author lives in a country without a US tax treaty, so they would lose the full 30% of the S&P 500 dividend paid by VOO to US tax. By contrast, VUSD uses the US/Ireland tax treaty for a 15% US rate. For the topic author then, assuming a 2% dividend and ignoring any local tax effects, the expected difference in total return for VUSD would be 0.3% higher than for VOO.
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