Reallocating Assets -- affect prices?

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BAM!
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Reallocating Assets -- affect prices?

Post by BAM! »

Let's say I'm helping to reallocate some assets. If there is $250k in each of these: DISV, DFLVX, DISV, DFSVX, DFIVX, and I want to sell them and convert to VTSAX or SWTSX, is there any reason to not do it all in one transaction? In other words, will this dollar amount affect the sell and purchase prices of these assets? Should I split it up over a week? At what point does it matter.
Silk McCue
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Re: Reallocating Assets -- affect prices?

Post by Silk McCue »

The dollar amount of the transaction does not change the share price when you sell and buy funds or ETFs. The share price is the share price.

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retired@50
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Re: Reallocating Assets -- affect prices?

Post by retired@50 »

BAM! wrote: Fri Feb 09, 2024 3:55 pm Let's say I'm helping to reallocate some assets. If there is $250k in each of these: DISV, DFLVX, DISV, DFSVX, DFIVX, and I want to sell them and convert to VTSAX or SWTSX, is there any reason to not do it all in one transaction? In other words, will this dollar amount affect the sell and purchase prices of these assets? Should I split it up over a week? At what point does it matter.
I suspect you're referring to market impact, which some large mutual funds could experience if they are buying or selling a decent percentage of available shares of a particular company.

Individual investors buying or selling $250k of a fund with hundreds of millions, or billions of dollars worth of shares aren't likely to have to worry about this unless the daily trading volume of one of the tickers listed above is less than a couple million dollars.

More about average daily volume here:
https://admainnew.morningstar.com/webhe ... olume.html

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livesoft
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Re: Reallocating Assets -- affect prices?

Post by livesoft »

While you can do it the same day without concern, it will always take more than one transaction.

However, I think you should split it up and have some fun experimenting with your orders, so that you learn something.
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WeakOldGuy
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Re: Reallocating Assets -- affect prices?

Post by WeakOldGuy »

BAM! wrote: Fri Feb 09, 2024 3:55 pm Let's say I'm helping to reallocate some assets. If there is $250k in each of these: DISV, DFLVX, DISV, DFSVX, DFIVX, and I want to sell them and convert to VTSAX or SWTSX, is there any reason to not do it all in one transaction? In other words, will this dollar amount affect the sell and purchase prices of these assets? Should I split it up over a week? At what point does it matter.
This is likely an unnecessary caution, but... If those are in a taxable account, carefully consider the tax consequences of selling $250k of assets. Depending on the amount of unrealized gain, that could be a big hit.
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grabiner
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Re: Reallocating Assets -- affect prices?

Post by grabiner »

Don't place a market order for a large ETF trade; you might match multiple limit orders to buy at different prices. It's fine to use a marketable limit order; that is, if the ask is $50, place an order to sell at $50. This will sell all the shares someone is willing to buy at $50, but won't carry over to the next buyer who is willing to pay only $49. If your order isn't accepted in full, you can likely withdraw it and get a fair price a few minutes later once other traders have placed new orders.

If you are selling a large amount of a low-volume ETF, contact your brokerage. I don't think this is necessary for $250K of DISV, which trades $7.5M daily, but you should still watch the spread when trading.
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