ETFs order type in Vanguard

nomoneynohoney

Hi All,

When you buy ETFs in Vanguard, there are two different types of order- 1) AtBest -you can order anytime and 2) Quote and Deal - you can order only when the market is open+ cost additional fee( 7.5 pounds in my case, but it might depend on type of ETF?).

I am not sure if I understand how it works.
Can somebody explain both types and maybe advantages and disadvantages of both of them?

Many thanks in advance!

masonic

In the first option you'll automatically trade at whatever price is available when the deal is placed. In the second, you get request a quote and decide whether or not to accept it.

nomoneynohoney

masonic,

Thanks for your reply.

'when the deal is placed'- Why they dont want to place the deal right now( if i order when the market is open? do they want to cobmine my order with all others and make one big order once/twice/three times per day?
For example, if the price was X in the morning, X+100 in the evening and the price for me was X+60, how i can make sure the deal was placed when the price was X+60 and not when it was X?

masonic

nomoneynohoney wrote: »

'when the deal is placed'- Why they dont want to place the deal right now( if i order when the market is open? do they want to cobmine my order with all others and make one big order once/twice/three times per day?

I don't know whether Vanguard Investor (to whom I assume you are referring) pool orders or not. Elsewhere, "At best" orders would be equivalent to "Quote and deal", and distinct from "Limit orders" where a price limit is specified in advance. It's possible that Vanguard Investor, who charge nothing for ETF trades, is pooling those orders so that they can make cost savings. Given that "Quote and deal" is a premium service, there must be something you are not getting with "At best" and I doubt it is just the ability to see the quote.

Given that you cannot know whether the price is going to move up or down from the point to request the order to the point it is placed, and from day to day, price movements more or less equally likely to work in your favour as against you, perhaps this is of little consequence.

For example, if the price was X in the morning, X+100 in the evening and the price for me was X+60, how i can make sure the deal was placed when the price was X+60 and not when it was X?

The time the order was executed would be recorded on the contract note for the deal.

If you want more control over when the deal is placed and/or at what price, then you would pay the £7.50 for 'Quote and Deal', or you would buy your Vanguard ETFs using an alternative investment platform where there there may be lower charges for this service, and you may have access to useful features like limit orders.

Alexland

I would never pay extra for an instant trade as it's almost completely random if the price will go up or down between the point of ordering and the next scheduled trade.

https://www.vanguardinvestor.co.uk/investing-explained/what-are-etfs

We combine your activity with that of other investors and place bulk deals twice a day. Alternatively, you can deal at an intra-day price using our quote and deal service for just £7.50 per deal.

msallen

Its just like buying into one of their OEICs really - no charge to trade but you accept the next scheduled price point "blind".

nomoneynohoney

Ok, Thanks guys, it helps a lot!