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Earl wrote:
> Interesting that this should come from Vanguard which has one of the
> most restrictive stock fund trading policies. With the exception of
> retirement accounts, all exchange and redemption requests must be
> submitted in letter form by mail. This has (IMO) has made Vanguard stock
> funds unsuitable for market timing accounts other than retirement funds.
Not as strange as it might seem at first glance. They normally create
large blocks of shares based on the underlying so it should actually
reduce trading in the funds as well as increasing the net assets. The
VIPERs will stay long the funds and short term investors or traders will
trade the VIPERS.
> Further, I find it strange that Vanguard would attempt to enter an area
> which is already dominated by indexed based depositary shares such as
> SPY, QQQ, and others.
Looks like they saw how much money Merrill Lynch is making on their
HOLDRs. :-) I actually think they will fill a market niche. Except for
the 500 fund, the other 4 cover indices with no index shares
available... S&P 500 Barra Growth, S&P 500 Barra Value, Russell 2000,
Wilshire 5000. Only downside I can see for the investor is you pay a
double management fee... once for the fund and again for the VIPER. But
Vanguard's fees are traditionally quite low. Add the ability to trade
intraday and short the shares (even on a downtick) and it looks like a
better deal than the underlying funds for anyone investing or trading
with a less than 20 year time frame.
http://www.amex.com
Click the "Index Shares" and "Structured Products" tabs for more info on
the Amex sponsored index shares and the ML HOLDRs. Presumably the
Vanguard VIPERs will be listed under Structured Products when they
become available.
--
Dennis
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