Help me understand S&P 500 EFT's

BuckRogers

Well-Known Member
Joined
Jan 17, 2012
Messages
482
So I am trying to understand this.
I invested in two ETF's, the Satrix S&P 500 and Sygnia S&P 500.
The same amount, same time - about a week ago.
Sygnia has lower fees.
Both are up.
Satrix is higher at the moment, about 1,1 percent more that the Sygnia fund.
Why ?
 

Messugga

Honorary Master
Joined
Sep 4, 2007
Messages
11,963
So I am trying to understand this.
I invested in two ETF's, the Satrix S&P 500 and Sygnia S&P 500.
The same amount, same time - about a week ago.
Sygnia has lower fees.
Both are up.
Satrix is higher at the moment, about 1,1 percent more that the Sygnia fund.
Why ?
Likely just timing on when they updated their pricing. There was an upswing last night.
 

koffiejunkie

Executive Member
Joined
Aug 23, 2004
Messages
9,418
When you and 10,000 other people buy shares in the ETF, the fund manager then has to go buy the underlying shares, in the correct proportions (as per the index). Imagine you put R1000 in S&P500, but S&P500 contains shares that cost over $300, and the fund manager can only buy whole shares. This share is maybe 1.2% of the fund, and some other share that costs a similar amount has to be bought at 0.8% for example. So they have to aggregate a large number of orders to be able to pull this off, and even then, they're never going to have the percentages exactly right.

Then another factor is when exactly they're buying each share. They're competing with each other on the open market. Prices move based on other fund managers purchasing. You don't see this in EE, but in a proper broker software you see the open orders - so many shares offered at x, and so many shares asked at y, and there's always a gap between the two. If I bid to buy a share at $101, and all the offers are at $103, I can either leave my order open and hope the price comes down, or I can suck it up and pay $103 per share. If I decide to wait and the price goes up, I end up losing out. If I decide to buy, and the price comes down, I lose out too. If my competitor did the opposte, you'll see a difference in the value of their units.

As far as I know both are feeder funds, so instead of buying the underlying shares, they're actually buying ETF units in some existing ETF or mutual fund. That still leaves you with the same issue, just at a higher level. Exactly how much each buys at which time. And there's also the issue of currency fluctuation. Satrix might be buying dollars at 8am, and Sygnia at 9am, and NDL might make a press release at 8:30 causing the Rand to drop.

None of this is a problem, per se. In the long run, it tends to come out roughly the same.
 
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