Author Topic: Revenge of the fair value pricing  (Read 233 times)

dhc

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Revenge of the fair value pricing
« on: March 11, 2020, 07:05:53 PM »
I tax loss harvested from one Vanguard international fund to another yesterday. The FTSE all world ex US index the fund I was selling is based on closed down. Vanguard closed its fund up 3%. I guess there must have been futures market trading, but it sure wasn't accurate - the index opened down even further today and just kept dropping, and today Vanguard's fund closed down 4%. If only they'd matched the close price I estimate I'd have an extra year's worth of carryover losses. Oh well...I guess if it keeps dropping I'll just need to find a 3rd fund to exchange to and watch futures markets more carefully before pulling the trigger.


On the plus side:
  • I waited until I had big enough losses that this mispricing didn't result in accidental taxable gains.
  • Both the fund I sold and the fund I bought were mispriced equivalently, so I didn't lose money in the exchange, just had a smaller than expected taxable loss.
  • It looks like Fidelity's international index also closed up 3% yesterday, so it's not like Vanguard is operating in a vacuum.
  • I learned about fair value pricing and the uncertainty that comes with it, so I'll be better prepared next time.
I hope this can also serve as a warning to anyone else in a similar position!