Should you split large ETF purchases?

aroominyork

Are there reasons to split large purchases of ETFs into 2+ smaller transactions, and if so to keep them below about what size? This is about AGBP which is large and liquid.

vacheron

What is your thinking as to why that could be beneficial?

Last ETF I bought was £75K of MSCI ACWI which I did all in one go.

What do you define as large? AGBP is a 13 billion dollar fund, so it would take some substantial amount for a purchase to influence it in any way?

leosayer

II have much higher charges for trades over £100k so it's worth breaking such trades down.

Other than charges (which are very platform specific), I can't think of any reason to split trades.

aroominyork

ii have just increased the limit to £500k before the £40 charge kicks in. AGBP has quite a wide spread; HL shows 0.74% at this point in time. I realise the final quote would probably come in lower but I'm planning to set a limit price. If I set it for the full amount of £145k and say only £80k was available at that price, I assume it would not trade. It wouldn't be like Betfair Exchange where it will nibble as much as is available and leave the balance untraded.

mills112

I buy huge, and i mean huge amount of ETF and they are always available. every so often it does say, there is not enough available but that has only happened once in a while and then they are able to buy it soon after as they keep doing it.

ETF by definition are volatile and available so you should be fine. i buy as much as i can in one transaction as there is less fee but i often split it over two transactions, simply to get the pricing right and nothing to do with the amount available.

masonic

Trading212 has forced me to split orders (IIRC to a max of about £30k). Elsewhere I wouldn't normally split. I can only recall a couple of orders I've placed that have crept over £100k.

aroominyork

I experimented and got these results consistenty over a couple of minutes.

For £1k: £4.599

For £10k: £4.59998

For £145k: £4.59998

So it looks like I have to suck up the 0.02% higher price.

GeoffTF

There was a £471,955.40 trade of AGBP on the LSE at 08:44:55 this morning:

https://www.londonstockexchange.com/stock/AGBP/ishares/company-page

aroominyork

Wasn't me, guv.

k12479

Are there reasons to split large purchases of ETFs into 2+ smaller transactions…

Time cost averaging, arguably.

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/81945144#Comment_81945144

ETFs can trade at a small discount or premium to NAV. That could work for or against you, but you might want to average that effect out. A £5 commission is 0.005% of a £100K trade, which is small in comparison to the likely discount/premium. AGBP is was at a discount of 0.03% at the last valuation point according to TradingView:

https://www.tradingview.com/symbols/LSE-AGBP/

We do not, however, know what the discount/premium is in real time. Splitting a large trade into £100K (or perhaps smaller) chunks could make sense.