ETF Risk of low FUM Vanguard products VVLU / VGMF

Discussion in 'Shares & Funds' started by Zenith Chaos, 23rd Oct, 2019.

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  1. Zenith Chaos

    Zenith Chaos Well-Known Member

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    I sent the following email to Vanguard and received the response below:

    . . . .

    Can you confirm the likelihood that funds such as VVLU and VGMF would be closed as a result of low FUM?

    . . . .

    Thank you for contacting Vanguard.

    It's not likely that they will close due to low AUM in the foreseeable future as we are making a concerted effort to expand our actively-managed products (including our factor-based products).

    Globally, these types of products tend to have lower AUMs than normal market-cap driven index products. This is primarily because Smart-Beta or more factor-focussed strategies are still relatively new in the ETF space.

    If we can be of further assistance, please do not hesitate to contact Vanguard Client Services on 1300 655 101, between 8.00am and 6.00pm, Monday to Friday, Melbourne time, or alternatively, via return e-mail.
     
    Pleep, Burgs, Anne11 and 2 others like this.
  2. Zenith Chaos

    Zenith Chaos Well-Known Member

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    VVLU, buyers: 1045 vol at 50.50; sellers: 157 vol at 51.50. Last NAV 50.65, last sale 50.74.
    Do Vanguard not have the accountability to be the market maker?
     
  3. Trainee

    Trainee Well-Known Member

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    what does this statement even mean?
     
  4. willair

    willair Well-Known Member Premium Member

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    The forecaster is the market itself,and if you can understand what that means you will way way ahead of the vast majority side-show fund managers professionals market analysts skid row writers and reporters..

    I thought from what i have read for years within this site ,once you buy into these set-ups ,one just sits on the deck drinking coffee or high octane home-brew and watching the world pass by..
     
  5. The Falcon

    The Falcon Well-Known Member

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    https://api.vanguard.com/rs/gre/gls/1.3.0/documents/16189/au

    No, they will pay market makers to provide some liquidity but they dont guarantee to ensure it trades at NTA.
     
  6. Zenith Chaos

    Zenith Chaos Well-Known Member

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    A market maker is responsible to ensure the liquidity of an ETF by offering to buy and sell units "slightly" below and "slightly" above NAV respectively - using the term "slightly" very loosely.

    My issue was that when I wanted to buy there was obviously no market maker selling and I would have been forced to pay $1 higher had I purchased at the price offered by the only seller. I think this might have happened to some poor sod in the past who pushed the price up for the DRP. This can be a disadvantage of ETFs with low liquidity.

    Statement from @The Falcon 's link: "Vanguard has obligations to have market making arrangements in place under certain circumstances under the AQUA Rules. Vanguard has appointed a market maker to assist in maintaining liquidity for the Active ETF units on the ASX."
    ....implying they have some accountability but probably an infinitesimally vague scenario and impractical such that no protection is offered to retail investors.
     
  7. Trainee

    Trainee Well-Known Member

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    Known risk of illiquid etfs, surely?
     
  8. Zenith Chaos

    Zenith Chaos Well-Known Member

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    There's illiquid and then there's solid with a long way between. All I expect is to be able to buy or sell within a reasonable range, - the offered range was 2%.
     
  9. BigPhilYonnie

    BigPhilYonnie New Member

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    Try having a look now. Miserable.
     

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