Forum Topics Index ETFs
Dafish
2 years ago

Im sure thans an obvious answer im missing here But two of my largest poistions IVV which tracks the S&P 500 and Betashares NDQ which to my understanding tracks thw Nasdaq 100.

But ive gotten into the habit lately of checking how these indexs have performed overnight in the US and im noticing a large difference in returns as you can see in attached screenshots where ive compared the etf to the index over the last month .

As both my holdings are in AUD am i correct in thinking currencies arent the cause

And i understand there my be some slight deviation or delay in the ETFS rebalancing methods but with the return difference over a month been so vastly different i just dont get whats going on

and i guess lastly should i be investing in such indexs directly through the US market


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Vandelay
2 years ago

Hi @Dafish , you are right that most of the difference is the change in fx as you ca see the aud vs usd over the same time period below.c7e243adb4f153152ae4a7fc8b0a9fc2e9138e.jpeg

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Dafish
2 years ago

Thanks @Vandelay it just surprised me that there would be a 7.64% difference between IVV and the S&P 500 over such a short period

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Vandelay
2 years ago

The good news is, when the fx rate goes the other way, you will get the benefit. Over time it will most likely even out.


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edgescape
2 years ago

In addition to currency fluctuations, fees are deducted from the net asset value of the ETF (which tries to be equal to the SP500) to give the final ETF price.

When thinking of how ETFs are managed, you need to think of them as a managed fund with a PM that cuts and adds positions as stocks are removed and added from the main index.

And for each country providing the ETF in their respective currency, there will then be a manager for it.. This is where the fees are charged.

So it will probably be something like Price = NAV-(fees as part of managing ETF). With each country where the ETF is provided, there may be variance in fees due to tax laws etc...

Also with passive index ETFs such as IVV, I imagine all they do is they try to keep the proportion of the holding for a company the same as the parent index.

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