Vanguard ETF intraday volatility compared to peers.

[BoomBustInvest]

I am invested in Vanguards global stocks ETF (VHVG) and I have been comparing it to the equivalent iShared ETF (SWDA). The volatility of the VHVG daily candles is around twice that of the ishares ETF. Why is the Vanguard fund so much more volatile than the ishares fund? They are invested in the same global markets at the same ratios.

This 'could' make a difference to longer term returns because if I DCA into the vanguard fund and catch at the wrong point in that intraday volatility on a number of deposits, it could negatively impact the overall return. What's more, I have noticed the same problem with Vanguard bond funds (VAGS) for example. What is causing this amplified intraday trading price volatility on Vanguard funds?

[GeoffF100]

SWDA is more than ten times the size of VHVG according to HL, and had more than ten times the trade volume yesterday on the London Stock Exchange. The discount / premium of SWDA may also be smaller throughout the day because the Authorised Participants will be arbitraging it more often. The spread of SWDA is also less than half as wide. VHVG does, however, track a better index and has an OCF of 0.12% versus 0.2% for SWDA. Are you a trader or a long term investor?

https://www.hl.co.uk/shares/shares-sear ... -ucits-etf
https://www.londonstockexchange.com/sto ... mpany-page

https://www.hl.co.uk/shares/shares-sear ... tf-usd-acc
https://www.londonstockexchange.com/sto ... mpany-page

[BoomBustInvest]

thanks.... I'm a long term investor, but if I am continuously DCA'ing into the fund and those regular purchases happen at the wrong time of the day in terms of volatility that could make a material difference could it not? If that is true then could SWDA actually be a better long term option event though it's 0.8% more expensive than VHVG?

[Lootman]

SWDA is more than ten times the size of VHVG according to HL, and had more than ten times the trade volume yesterday on the London Stock Exchange. The discount / premium of SWDA may also be smaller throughout the day because the Authorised Participants will be arbitraging it more often. The spread of SWDA is also less than half as wide. VHVG does, however, track a better index and has an OCF of 0.12% versus 0.2% for SWDA. Are you a trader or a long term investor?

That's exactly it. Some ETFs target traders and institutional investors, for whom liquidity, spreads and the existence of traded options are more important. The expense ratio is typically a little higher for these.

But a buy-and-hold small investor might prefer to choose the cheaper variant.

In the US iShares has a "Core" set of ETFs for the small investor and an institutional set of ETFs, which trade in larger volumes.

[GeoffF100]

thanks.... I'm a long term investor, but if I am continuously DCA'ing into the fund and those regular purchases happen at the wrong time of the day in terms of volatility that could make a material difference could it not? If that is true then could SWDA actually be a better long term option event though it's 0.8% more expensive than VHVG?

If you make regular purchases, the discount/premium should average out, and you only pay the spread once.