Being early doesn’t give you an advantage
This isn’t a new cryptocurrency or a small company you’re discovering before everybody else.
It’s an ETF tracking an established global index. (Remember This)
The companies inside the fund already have market prices. Buying the ETF during its first week doesn’t give you a cheaper entry into Apple, Microsoft or the wider stock market.
Even if the ETF initially trades at around £3 or £4 per unit, that doesn’t make it “cheap”. The unit price is simply how the fund has been divided up.
There is no prize for being one of its first investors.
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Rushing could cost you through slippage
ETFs have two prices:
- The bid price someone is willing to pay
- The offer price at which someone is willing to sell
The gap between them is called the bid-offer spread.
If you rush in with a market order, your broker prioritises completing the trade not necessarily getting you the best price. You could therefore pay more than the price you saw on screen.
That difference is known as slippage.
This can become more noticeable when markets are volatile, trading activity is limited or the underlying markets are closed. Vanguard itself recommends considering the spread and using limit orders when price protection matters, although a limit order isn’t guaranteed to execute.
A tiny difference may not sound important, but it could immediately wipe out several years of the fee saving you were chasing.
The new ETF costs 0.07%, compared with 0.14% for VWRP.
That saves approximately:
- £7 per year on £10,000
- £35 per year on £50,000
- £70 per year on £100,000
It’s a useful saving but not one worth making a poor trade for.
