Vanguard Fund Price Calculation

lindabea

I'm completely buffled with the way Vanguard calculate the fund prices.  It seems so inconsistent with markets movement.  For instance yesterday the FTSE went up 22 points and the DJI went up 243 points, yet the price of the VNG 60%ACC fund went down by £1.53.  On Tues DJI went up by a lot more yet the fund price only went up by £1.06.  There doesn't seem to be any correlation.  

Can someone please explain to me what may have caused the price to go down yesterday when markets would have indicated that the fund price should have increased.  

El_Torro

I don't look at daily fluctuations but how are bonds doing? VLS60 is made up of 40% bonds so this is an important part of the final fund price.

Also when looking at the Dow Jones remember that the exchange rate makes a difference. The pound is currently relatively strong against the US dollar, which makes dollar based investments worth less than when the pound was weaker.

coastline

The fund will have a price setting time . Cut off point. Could be 12 noon midday ? Basically you'd have to estimate from that point.
Below in the chart set the timeframe to 1W or 1 week. Look at 12 noon and take that to the next day.

United States Stock Market Index - Quote - Chart - Historical Data - News (tradingeconomics.com)

United Kingdom Stock Market Index (GB100) - Quote - Chart - Historical Data - News (tradingeconomics.com)

TonyMMM

Vanguard funds are priced at 21.00.

Hoenir

DJI is not representative of the much broader US markets. DJI consists of just 30 stocks. 

Hoenir

TonyMMM said:

Vanguard funds are priced at 21.00.

That's market closing time in the US for the NYSE (5 hours behind the UK). 

EthicsGradient

Hoenir said:

DJI is not representative of the much broader US markets. DJI consists of just 30 stocks. 

While others have all made good points, I suspect this is the most relevant for yesterday - the (idiosyncratically-weighted) Dow Jones rose by 0.59%, but the S&P 500 (market-cap-weighted, and the bulk of the US market) fell by 1.39% (tech stocks had a bad day yesterday; the Dow Jones is comparatively tech-light).

I really think UK media should stop talking about the Dow Jones. It's an increasingly quaint relic of stock markets from decades ago.

Hoenir

EthicsGradient said:

Hoenir said:

DJI is not representative of the much broader US markets. DJI consists of just 30 stocks. 

While others have all made good points, I suspect this is the most relevant for yesterday - the (idiosyncratically-weighted) Dow Jones rose by 0.59%, but the S&P 500 (market-cap-weighted, and the bulk of the US market) fell by 1.39% (tech stocks had a bad day yesterday; the Dow Jones is comparatively tech-light).

I really think UK media should stop talking about the Dow Jones. It's an increasingly quaint relic of stock markets from decades ago.

S&P is weighted by free float capitalisation not market capitalisation. Companies also have to be accumulatively profitable over the previous 4 quarterly reporting periods. To be invited to join then remain in the index. 

coastline

There'll still be some allowances if it's 21.00 pm cut off point I'm thinking ? The general world index containing a huge allocation to the SP 500 finished down. Then of course there'll be an increased allocation to the UK in VLS.

MSCI World Index, XX:990100 Advanced Chart - (MSCI Global) XX:990100, MSCI World Index Stock Price - BigCharts.com (marketwatch.com)

The Bond/gilt element was hardly changed... That's if the selection below is near enough to the 40% VLS ?

Vanguard Global Aggregate Bond Fund UCITS ETF, UK:VAGS Advanced Chart - (LON) UK:VAGS, Vanguard Global Aggregate Bond Fund UCITS ETF Stock Price - BigCharts.com (marketwatch.com)

My main point still stands cut off points are different to market closing times. The US futures market trades in the early hours and European markets are always influenced by overnight moves in the US. Basically saying here if the US markets closed up 1% at 9pm and then reversed the move in the early hours of the futures then the Euro markets might just open flat. So the net effect is zero. Follow the live feeds as I posted originally. End of the day just stick the fund under the mattress and go down the pub. Saves all the bother if you're saving for decades. Nothing wrong in understanding the workings and I'm still learning. Nobody has it boxed off as I've seen on many forums. Some haven't understood much at all . Others just think they know more. Plenty people think they've got it all boxed off yet you rarely see their work . I'm not talking specifically about this forum. I'm spending more time on the likes of twitter feeds these days. Some have a great grasp of history and cycles. Details are usually provided by posters . Free info better than library books I'm sure.

Hoenir

coastline said:

There'll still be some allowances if it's 21.00 pm cut off point I'm thinking ? The general world index containing a huge allocation to the SP 500 finished down. Then of course there'll be an increased allocation to the UK in VLS.

VLS range doesn't constantly rebalance. They operate within bands. Allocation isn't a precise science. Then there's the momentum of trades i.e. new investor money and redemptions to be factored in.  Also adjustments for income received and income to be accrued.