vanguard etf: Mystery trade adds almost $9 billion to Vanguard S&P500 fund

By Katherine Greifeld

Close to the beginning of December, a thriller over-the-counter commerce pulled about $7 billion from Vanguard Group’s S&P 500 exchange-traded fund. It simply bought all of it again and extra.

The $194 billion Vanguard S&P 500 ETF (ticker VOO) added $8.7 billion on a single day this week, about two months after that file withdrawal. Just like the 2020 mega outflow, VOO’s money infusion got here amid lower-than-average buying and selling volumes and there have been no noticeable giant block trades, in accordance with knowledge compiled by Bloomberg.

All of it factors to a different monster over-the-counter commerce.

“A big establishment arrives with, say, 200 equities which are within the S&P. They work with a dealer to get that morphed right into a VOO place,” stated Dave Nadig, chief funding officer at knowledge supplier ETF Tendencies. “The almost definitely motive for a commerce like that is liquidity. All ETFs are a lot simpler to handle, from a liquidity perspective, than any basket of particular person securities.”


When money flows into an ETF, a market maker generally known as a licensed participant, or AP, offers the issuer extra of the fund’s underlying belongings in alternate for brand spanking new shares to fulfill demand.

An investor ordinarily buys or sells their ETF shares on an alternate. However as a substitute of shopping for on the open market with money, they may theoretically take a number of the underlying belongings to an AP, and organize for them to be swapped into ETF shares. On this manner, belongings would stream into the ETF, however volumes related to the transaction wouldn’t present up on the alternate.

The newest knowledge present an analogous commerce additionally cycled by way of the $251 billion iShares Core S&P 500 ETF (IVV) this week. Roughly $7.6 billion poured into that fund, amid muted alternate buying and selling quantity and with none discernible giant transactions. That influx comes after $8.three billion was yanked from IVV in a single day in mid-December.

Vanguard spokesman Freddy Martino declined to touch upon the VOO stream. BlackRock didn’t instantly reply to a request for touch upon IVV’s soar in belongings.

Within the eyes of Bloomberg Intelligence analyst Eric Balchunas, it’s doubtless that the identical establishment was behind the outflows and inflows for each funds. He famous {that a} comparable sample passed off final yr.

“Mainly that is an investor who desires to be uncovered to S&P 500 however has some goal for promoting out and shopping for again in round finish of yr, most likely tax-related,” he stated.

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