ETF: Basic, specific, questions

ChilliBob

Thanks for the comments guys. With ITs I tend to look at history of discount and premium to see how it sits currently, and use the Z score from time to time.
For ETFS it seems its not a biggie if its a big ETF, but it might be worth considering for a smaller or niche one. 

I still struggle to find it though. Take this example of one I own: https://fundcentres.lgim.com/uk/en/fund-centre/ETF/Global-Equity/?isin_code=IE00BFXR5S54

I don't see the NAV on ft.com, but I do see it there. It doesn't seem to be available in GBP but the fund is priced in gbp, which is a bit of a pain! 

Thrugelmir

Click Prices in the bar (or scroll down the page)  and the latest published NAV is shown. 

underground99

ChilliBob said:

Thanks for the comments guys. With ITs I tend to look at history of discount and premium to see how it sits currently, and use the Z score from time to time.
For ETFS it seems its not a biggie if its a big ETF, but it might be worth considering for a smaller or niche one. 
I still struggle to find it though. Take this example of one I own: https://fundcentres.lgim.com/uk/en/fund-centre/ETF/Global-Equity/?isin_code=IE00BFXR5S54
I don't see the NAV on ft.com, but I do see it there. It doesn't seem to be available in GBP but the fund is priced in gbp, which is a bit of a pain! 

The FT is really just providing a market information service and as the ETF trades like a stock in real time, they are just telling you the price. As you say, you do see it on L&G's own site - which goes back to my comment a couple of days ago that "With an ETF, most issuers will publish on their own website the NAV on a daily basis and some will give details of the full portfolio, but it will not be real time, it will be last time they did a valuation".

The ETF will do its accounting in USD, so that's how they publish the NAV.  The fund manager doesn't have any need to publish a daily GBP NAV, as the NAV is the sum value of all of its holdings in shares of listed companies, and <5% of those companies will be trading on the UK stock exchange while over 60% are in the USA.  

For you, it's administratively more convenient to pay pounds, so you prefer to buy in that currency. Fair enough. You're welcome to do your own assessment of what you would be willing to pay today in pounds for a basket of assets which you knew the dollar value of yesterday, given changes in FX rates and the underlying market movements since the NAV was last published.  But the market price will give you a decent indication of what you should pay, as if it was massively wrong, smart people would buy or sell it until it was no longer wrong.

As you mention, it's not a big deal if you are using a mainstream ETF which is large and liquid and tracking a popular index. This is a small $50m fund, tracking L&G's own proprietary index, which the investment community at large is not particularly interested in following. If you want to avoid any 'pitfalls' of investing in small niche ETFs such as this, you would simply not buy it.

ChilliBob

Cheers both -it was not as obvious on my phone as it is on a PC to see the above info. I can see it now and the difference doesn't materially concern me. I have a small position in this of a few k - drawn to it by the low fees, the performance and the slight ESG tilt (but not too aggressive). Monevator first put me onto it in one of their lists a while back.
The size does concern me a bit which is why I've not jumped in with both feet. Whilst it's not an ETF, and it's a different index entirely, I might just go for the likes of Fidelity World P or HSBC FTSE All World, depending on whether I want developed and developing together or not. Good to know for future though

JohnWinder

collinsca said:

So spreading my investments (either as well as or instead of) e.g. in a worldwide fund such as the below, is a wise move then

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing?intcmpgn=equityglobal_ftseallworlducitsetf_fund_link

Yes, I think it is. The fund is 11 year old - that's comforting; Vanguard has been in UK only 13 years. Its index is good: broad, cap weighted, many countries, but omits small companies (not a hanging crime). It seems to not hold every stock in the index, but 'covers' them by 'investing in a representative sample of Index constituent securities'. Vanguard are leaders in managing index funds, and there'd be countless worse options.

noclaf said:

JohnWinder - Where an ETF 'fully replicates' the index it is tracking does this remove the risk you outlined above where the other party or middle man goes bust with your money?
I assume full replication is ideal but not always possible for some instances like your Oil example shows and for many other physical commodities.

Yes, I think it does. I think one needs to distinguish between full/partial replication, and using derivatives to replace physical acquisition. The derivatives bring with them the counter-party risk. Partial replication could mean they don't buy every one of the smallest shares (but a representative sample of the sector perhaps); this would reduce the 'friction losses' when trading that come with the illiquidity of very small companies: buy/sell spreads; price movements if you buy a lot of them.

I doubt they'd partially replicate with the big companies because their index tracking would fail badly if that company went brilliantly which they didn't hold - so I can't imagine they do that.

collinsca

JohnWinder said:

collinsca said:

So spreading my investments (either as well as or instead of) e.g. in a worldwide fund such as the below, is a wise move then

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing?intcmpgn=equityglobal_ftseallworlducitsetf_fund_link

Yes, I think it is. The fund is 11 year old - that's comforting; Vanguard has been in UK only 13 years. Its index is good: broad, cap weighted, many countries, but omits small companies (not a hanging crime). It seems to not hold every stock in the index, but 'covers' them by 'investing in a representative sample of Index constituent securities'. Vanguard are leaders in managing index funds, and there'd be countless worse options.

noclaf said:

JohnWinder - Where an ETF 'fully replicates' the index it is tracking does this remove the risk you outlined above where the other party or middle man goes bust with your money?
I assume full replication is ideal but not always possible for some instances like your Oil example shows and for many other physical commodities.

Yes, I think it does. I think one needs to distinguish between full/partial replication, and using derivatives to replace physical acquisition. The derivatives bring with them the counter-party risk. Partial replication could mean they don't buy every one of the smallest shares (but a representative sample of the sector perhaps); this would reduce the 'friction losses' when trading that come with the illiquidity of very small companies: buy/sell spreads; price movements if you buy a lot of them.

I doubt they'd partially replicate with the big companies because their index tracking would fail badly if that company went brilliantly which they didn't hold - so I can't imagine they do that.

Thanks very much.