Vanguard Is Growing Faster Than Everybody Else Combined

Re:Vanguard Is Growing Faster Than Everybody Else Combined by NTDF9 on Wednesday April 19, 2017 @02:21AM (#14145871)

Great explanation! Thanks!

>> So to answer your questions, in a flash crash scenario as an ETF owner you'll experience more lag in both cases

So the lag is due to inability to quickly buy/sell the percentages that were allocated for different stocks to build a share, right?

And if I understand correctly, this means if people keep their emergency funds in ETFs, in a crisis, they probably won't be able to access those funds quickly enough to get it at list price (because the price will move because of the lag).

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Re:Vanguard Is Growing Faster Than Everybody Else Combined by krit_dms on Wednesday April 19, 2017 @02:34AM (#14145926)

Authorized participants (APs) exist for all ETFs. their purpose is to make sure that the ETF mirrors the underlying assets, and to provide liquidity.

Consider a ETF that consists of a single stock. IF the stock drops, the AP will lower its Bid/offer spread, and force the ETF down to the same level as the stock. But as this is a reaction to the stock falling, there is going to be a lag between the stock falling, and the ETF falling. This doesn't mean that you can sell the ETF at a higher price, necessarily.

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Re:Vanguard Is Growing Faster Than Everybody Else Combined by wbl on Wednesday April 19, 2017 @01:18PM (#14149571)

A lag of milliseconds. Arbitrage is largely automated for this.

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