Typical Spread on Vanguard FTSE 100 ETF

rockitup

Just been looking at Vanguard FTSE 100 ETF with their low TER but I would be intending to swing trade this ETF.

Does anybody know how much the "Typical" spread on the price is during trading hours?

Thanks

JamesU

rockitup wrote: »

Just been looking at Vanguard FTSE 100 ETF with their low TER but I would be intending to swing trade this ETF. Does anybody know how much the "Typical" spread on the price is during trading hours? Thanks

I compared some indices on Monday 10th Sept during trading. On i-Dealing, for two FTSE 100 index providers within a few minutes of each other, prices were:

Vanguard (VUKE): Bid: 2723.8 / Offer: 2727.3 (spread = 0.13%)

iShare (ISF): Bid: 579.84 / Offer: 579.86 (spread = 0.02%)

Hope that helps.

JamesU

rockitup

Many thanks JamesU for the details of the spread and also the comparison against the ISF ETF too, that was a great help.

Actually the end-of-day figures show the same same spread of 4p on VUKE according to HL, but the spread on iShares ISF is way lower. This is great news but I will have a look at these again over next few days, thanks again

JamesU

rockitup wrote: »

Many thanks JamesU for the details of the spread and also the comparison against the ISF ETF too, that was a great help.

Actually the end-of-day figures show the same same spread of 4p on VUKE according to HL, but the spread on iShares ISF is way lower. This is great news but I will have a look at these again over next few days, thanks again

No problem, have also asked OPs for spread comparisons on their platforms in the past. If you need other tests during trading hours, just ask.

On some other low ter indices, the HSBC etfs H50E (Eurostox 50, ter = 0.15%) and HSPX (S+P 500, ter = 0.09%) have low spreads during trading hours.

JamesU

coastline

I've traded ISF.L in a stocks and shares ISA and usually works well...just heard about Vanguard recently so I will keep a check on them..
Spreads on both ISF and VUKE seem decent which should help short term trading over a period of weeks or months...although most posters appear to be more into longer term investment.
What I've noticed with ISF.L is the dividends are built in to the daily movement especially when the largest payment is about to be released....just the same as any share going XD.
These two charts should show what I mean...in the first chart the dividend is a fair size as companies tend to pay final dividends early in the year...



In this chart later in the year you can see the FT100 and ISF closer together reflecting the payout of the dividend...the payment was around 7p in late April.

rockitup

Thanks coastline,

i hadn't looked into dividends on these index ETF's yet but interesting to see the charts comparing against the FTSE100 Index.

I used to be a long term investor until about 6 years ago, then went through a phase of day trading/spread betting. In last 2 years I have found myself more likely to make profits on swing trades on indices from durations of a few days up to 3 months (most were held under 1 month). My individual share picks have proved not so good :mad:

Back to the indices, I am trying to make cost comparisons between using ETF's, spread betting and CFD's. Spread betting and CFD's are okay up to a point taking interest charges into the calculations, but if it all goes wrong and I had to hold for longer term to recover then the ETF's are far more suitable. Only trouble is that they are restricted to trading during normal hours whereas Index CFD's and Spread bets are tradable overnight too.

I had one bad trade on leveraged ETF's and had to hold for over a year to get back into profit and I normally hold those for no more than a day or two. Using a spread bet would have been very costly there.

The difference in spreads is a major factor for me due to the size of my trades and also the short term I aim to hold for. That ISF spread looks very appealing compared to VUKE, I am just looking to take hopefully a 2% to 3% profit on average (about 110 to 170 points on FTSE)

Just have to make up my mind which method to use now...

JamesU

That's a very interesting observation Coastline. ISF went ex-div on 23rd May and in the second chart, the value of ISF trends back to the UKX index exactly at this time.

JamesU

coastline

JamesU wrote: »

That's a very interesting observation Coastline. ISF went ex-div on 23rd May and in the second chart, the value of ISF trends back to the UKX index exactly at this time.

JamesU

Utility shares are good examples of this as they pay healthy dividends... final dividend XD day is always one to watch..
I found this out with ISF a few years ago as the price normally reflects the indicies....eg 5.80p...FTSE100 5,800..
Those charts are from a few years ago but the 4 xd dates will be similar today I'd think..

JamesU

coastline wrote: »

Utility shares are good examples of this as they pay healthy dividends... final dividend XD day is always one to watch....I found this out with ISF a few years ago as the price normally reflects the indicies....eg 5.80p...FTSE100 5,800....Those charts are from a few years ago but the 4 xd dates will be similar today I'd think..

Ah, did not look carefully enough to see the charts were from 2005, looked more at region of ex-div date, same principle though. Maybe need to remember to differentiate between tracking error and spread though, as the latter can vary a lot with trading volumes and general liquidity.

On UKX index, the newcomer VUKE is definitely one to watch out for on %ter=0.1% for any longer term asset allocation, provided future tracking is suitable, much better than ISF on %ter=0.4%. Both have the added merit of physical replication, though difficult to establish exactly what may be "on loan". Surprisingly, despite being synthetic both L100 and XUKX (Lyxor and Deutsche Bank db-x tracker) usually trade with a spread in the 0.025-0.05% region which, given their inherent counterparty risk, makes them a dubious trade relative to the physically replicated ISF.

JamesU

sabretoothtigger

rockitup wrote: »

I had one bad trade on leveraged ETF's and had to hold for over a year to get back into profit and I normally hold those for no more than a day or two. Using a spread bet would have been very costly there.

Leveraged ETF and spreadbet are both charging you interest on borrowed money. SB does it outright and daily usually but ETF puts costs through a declining capital value I think.
That makes performance harder to compare and the ETF might or should out perform the cost of money as you found. They would both return the money if held in that way, SB costs about 7% APR.
I know ETF normally cost 1% or less PA but leveraged I think that cost must rise

Out of hours the FTSE SB will cost alot more in spread.
I have ISF as 576.15/578.86 0.4%

rockitup

sabretoothtigger wrote: »

Leveraged ETF and spreadbet are both charging you interest on borrowed money. SB does it outright and daily usually but ETF puts costs through a declining capital value I think.
That makes performance harder to compare and the ETF might or should out perform the cost of money as you found. They would both return the money if held in that way, SB costs about 7% APR.
I know ETF normally cost 1% or less PA but leveraged I think that cost must rise

Out of hours the FTSE SB will cost alot more in spread.
I have ISF as 576.15/578.86 0.4%

Hi Sabre,

I use IG Index for spread betting, good thing with IG is that you have a choice on whether to pay a daily financing charge or go with the futures style contract for next month or quarter etc.

As regards to interest last time I checked about a year or two ago I think IG were charging Base or Libor + 2.5% but this may have changed, will look into this shortly.

Their spread on ISF is very large but I would have spread bet on the DFB or next quarter bet on the FTSE100. Reason for this is to be able to shut down the bet if it moves enough into profit during Wall Street or Asia trading time. 1 point spread in hours and 6 points outside hours so a maximum of about 0.1% if ending bet after the close.

Used 2x Leveraged on FTSE and 3x Leveraged on Russell Large Cap (that's the one that took over a year to return to profit!) and did great in 2010 and 2011 but those trades were smaller than I intend to do now, hence no more leverage for now.

Probably more likely I will go with the ISF ETF or maybe split the trade with some in ISF and some in a FTSE 100 CFD and keep the balance earning interest in the bank to offset some interest costs