Q: Question about discrepancy in price action between these two SP500 index ETFs.
As of 10:50 AM, SPY is up 1.45% while VFV is up 1.23%, lagging SPY by 22 basis points.
What explains the discrepancy in price action between these two very liquid funds? For index funds such as these, is there a mechanism that exists to correct and adjust these funds to the actual price movement of their indexes? Especially when it comes to VFV.
Thank you for your excellent service.
As of 10:50 AM, SPY is up 1.45% while VFV is up 1.23%, lagging SPY by 22 basis points.
What explains the discrepancy in price action between these two very liquid funds? For index funds such as these, is there a mechanism that exists to correct and adjust these funds to the actual price movement of their indexes? Especially when it comes to VFV.
Thank you for your excellent service.
5i Research Answer:
Because SPY is priced in US dollars, and VFV in Canadian dollars, prices will respond to currency movements. Consider that the C$ rose 0.30% yesterday, the performance difference is not as great when currency moves are included.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in VFV, SPY.