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Why do people choose ETFs at a higher share price over ones at a lower share price?
Posted on 6/13/24 at 7:52 pm
Posted on 6/13/24 at 7:52 pm
Specifically for S&P 500 ETFs. Why would someone choose VOO ($498 per share, 0.03% expense ratio) over something like SPLG ($63 per share, 0.02% expense ratio) or SFY ($19 per share, 0% expense ratio or 0.19% expense ratio depending on where it's bought)
Wouldn't it be better to buy into the fund where you will own more shares? I commonly see the advice "just buy VOO" is this just a general term to buy into the S&p in general? Still kinda new to investing (in my 20s) and want to make the best choices.
Wouldn't it be better to buy into the fund where you will own more shares? I commonly see the advice "just buy VOO" is this just a general term to buy into the S&p in general? Still kinda new to investing (in my 20s) and want to make the best choices.
8
Posted on 6/13/24 at 8:02 pm to LoneStar23
Expenses matter, but price per share doesn't. It's no different than a stock split where a company does 10-1 stock split and now you have 10 shares worth the same as one previously.
I will say that the lower pps investments are more attractive to some retail investors that can't buy fractional shares. For example, if you deposit $100/wk and can't buy fractional, it takes you 5 weeks of deposits to buy 1 share of VOO.
I will say that the lower pps investments are more attractive to some retail investors that can't buy fractional shares. For example, if you deposit $100/wk and can't buy fractional, it takes you 5 weeks of deposits to buy 1 share of VOO.
Posted on 6/13/24 at 8:05 pm to LoneStar23
Only reason the lower price per share would matter is if you're wanting to sell covered calls on your shares or something.
But a lot of those ones you mentioned don't necessarily have daily or sometimes even weekly options, they might only be monthly options with low volume.
I know folks who play the SPY wheel daily but yes you obviously need a lot of capital to do that if doing it from a cash covered position.
But a lot of those ones you mentioned don't necessarily have daily or sometimes even weekly options, they might only be monthly options with low volume.
I know folks who play the SPY wheel daily but yes you obviously need a lot of capital to do that if doing it from a cash covered position.
Posted on 6/13/24 at 8:10 pm to fallguy_1978
quote:
Expenses matter, but price per share doesn't.
What about dividends? If you own the cheaper one you're going to get more dividends correct? If they are the same yield %?
Posted on 6/13/24 at 8:17 pm to LoneStar23
quote:
What about dividends? If you own the cheaper one you're going to get more dividends correct? If they are the same yield %?
Nah, dividend yield is just the % you get annually on the amount of money you have invested.
So if you have 100k in any of them, and they all have a 2% yield, you'll get roughly 2k worth of dividends annually.
This post was edited on 6/13/24 at 8:18 pm
Posted on 6/13/24 at 8:22 pm to fallguy_1978
Gotcha. Thanks for the clarification
Posted on 6/13/24 at 9:06 pm to LoneStar23
As others have stated, if expense ratio and dividend % are the same, it doesn’t matter if you have 1 or 100 shares.
Both scenarios are fairly low risks, I’d say the only difference is the lower priced one allows for more potential investors so you could potentially have a larger price fluctuation so if you are a day trader you could potentially turn around shares quicker.
*this is not financial advice*
Both scenarios are fairly low risks, I’d say the only difference is the lower priced one allows for more potential investors so you could potentially have a larger price fluctuation so if you are a day trader you could potentially turn around shares quicker.
*this is not financial advice*
Posted on 6/13/24 at 10:22 pm to LoneStar23
quote:
Wouldn't it be better to buy into the fund where you will own more shares?
You can’t compare share prices of two different stocks/funds. Each has a different market value and number of outstanding shares.
For example, fund A might be worth $10B and have 1 billion shares, each worth $10.
Fund B might be worth $10B and have 200 million shares, each worth $50.
If you invest $50 for 5 shares of A or 1 share of B, you own 1/200M of the fund in both cases. More shares doesn’t matter.
This post was edited on 6/13/24 at 10:37 pm
Posted on 6/13/24 at 11:27 pm to LoneStar23
Expense ratios are what matters when picking ETFs/index funds. It's all about the amount you invest. When share prices get too high and people feel like they can't afford to buy a share, they probably don't realize fractional shares exist. This goes for individual stocks or funds
This post was edited on 6/13/24 at 11:28 pm
Posted on 6/14/24 at 1:10 am to LoneStar23
Theoretically, volatility should be lower(esp downside) at higher $P/S. In reality, 99.9% of retail is straight up yologambol, so it really doesn't matter, unless you're actively swing trading
This post was edited on 6/14/24 at 1:11 am
Posted on 6/14/24 at 8:20 am to LoneStar23
Specifically regarding splg, I think people don't buy it because they aren't aware of it.
I have a shite ton of voo, and spy is the second etf I ever heard of (with qqq being the first). I only learned of splg a few months ago and moving forward that will be my sp500 etf of choice.
I have a shite ton of voo, and spy is the second etf I ever heard of (with qqq being the first). I only learned of splg a few months ago and moving forward that will be my sp500 etf of choice.
Posted on 6/14/24 at 11:42 am to LoneStar23
SPLG and SFY are two entirely different funds, FYI. They do not track the same index.
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