Why don't ETFs adjust their prices when the ASX200 is down?

bluekelah · 28 April 2020

InsvestoBoy said:
If the assets underlying the ETF are illiquid then there might be a liquidity problem.

VHY, RDV, IHD, STW, VAS, etc will not have this problem and even in the very unlikely scenario that they do, it's only a problem for you if you are trying to sell at that moment. If you're trying to buy in such a scenario you should be able to get a better price than usual, and if you're not in the market to buy or sell then it doesn't matter one bit.

yes in most cases it wont matter one bit if you are long and dont need to sell. The funny thing is when things go bad, the herd wants out and starts selling off the ETF. Hence for Majority of investors it becomes a big liquidity problem. Really depends on the underlying assets the ETF is tracking.

And how can you be certain for example VHY not having problems when **** hits the fan? What happens in a big market crash in an environment of credit crisis? Heaps of investors will need to get out or may suddenly want to get out of stocks or ETFs and start selling en masse. At the same time the underlying stocks start to crash faster than the ETF "market makers" can keep track? thats when things go bad. Hard to envision such a scenario for VHY but hey, nowadays with the central bank money printing experiments and what not, anything is possible.

peter2 · 28 April 2020

@Dpkmelb You posted market depth shots timed at 18:35. Most (if not all) of the market makers orders have been removed since the market is closed.

Also, if you tried to place an order (HVST) this evening it won't go into the market until the next morning. Brokers enter their clients limit orders into the market some time before the open.

Dpkmelb · 29 April 2020

peter2 said:
@Dpkmelb You posted market depth shots timed at 18:35. Most (if not all) of the market makers orders have been removed since the market is closed.

Also, if you tried to place an order (HVST) this evening it won't go into the market until the next morning. Brokers enter their clients limit orders into the market some time before the open.

The screenshot i have attached was in the evening but during market hours also i did not see much activity from market makers. Regarding the HVST, i placed the order in the market hours but could not find it displaying in Market depth but it was there in My orders.

InsvestoBoy · 29 April 2020

Dpkmelb said:
The screenshot i have attached was in the evening but during market hours also i did not see much activity from market makers. Regarding the HVST, i placed the order in the market hours but could not find it displaying in Market depth but it was there in My orders.

I briefly checked VHY at one point today when I remembered and saw there was 7500 shares on offer at 45.99, that's $344,925 worth and even more on offer at 46.

Surely that is enough depth for you to get what you need?

qprjames · 27 May 2020

Smurf1976 said:
Firstly, welcome to ASF!

The one that has come to most attention as being problematic is OOO which is supposed to follow the price of crude oil but hasn't done so too well in recent times.

I currently OOO and didn’t really understand this. I should just have kept with my usual VAS and STW shares as I’m way out of my depth. Is it likely to come back? I have many years to wait out the storm!!

Dpkmelb · 27 May 2020

The problem with ETFs is market makers doesn't sell for the market price. Their price is most of the times more than the market price.

Chronos-Plutus · 27 May 2020

Dpkmelb said:
The problem with ETFs is market makers doesn't sell for the market price. Their price is most of the times more than the market price.

I am aware that market makers profit from the spread, but surely ASIC would regulate, investigate and fine if the market makers were defrauding investors.

Chronos-Plutus · 27 May 2020

qprjames said:
I currently OOO and didn’t really understand this. I should just have kept with my usual VAS and STW shares as I’m way out of my depth. Is it likely to come back? I have many years to wait out the storm!!

OOO tracks the S&P GSCI Crude Oil ER index; this index tracks WTI futures.

qldfrog · 28 May 2020

Chronos-Plutus said:
I am aware that market makers profit from the spread, but surely ASIC would regulate, investigate and fine if the market makers were defrauding investors.

Is that irony or joke of the week?
;-)
In good spirit...

Dpkmelb · 28 May 2020

Dpkmelb said:
Hi, I am trying to buy trade ETFs from past 2 weeks, but even though shares of Asx 200 are prices are down, ETFs not adjusting their prices accordingly. I kind of got a feeling their market prices are not true but made up numbers. And there are not enough etfs with very low volume. The most I saw in market depth are 6 to 8 buyers or sellers at the max. Also I noticed the order I have put in doesn't show up in Market Depth of an etf. Why? To get the false sense of security with the overrated ETFs by paying their fees and commissions, they take all the benefit and pass on the lose change. Is it not better off buying the reliable shares and getting all the good things.

Regarding the Market Depth issue, Selfwealth only displays 5 rows of data for all the ETFs in Market Depth. I have reported the issue to Selfwealth hopefully they will fix it. For the normal shares when clicked on See All link it will expand and show complete Market Depth but it doesn't work for ETFs.

Why don't ETFs adjust their prices when the ASX200 is down?

bluekelah

StockFan

peter2

Dpkmelb

InsvestoBoy

qprjames

Dpkmelb

Chronos-Plutus

Chronos-Plutus

qldfrog

Dpkmelb

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