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Email this5:42 pm
December 29, 2018
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Norman1 said
picassocat said
I think I have it figured out; my strategy would lose, because the capital gain is offset by the days not in the fund, thereby not gaining interest. Oh well.Not sure what you meant by that.
The ETF doesn't work like a regular bank account. There's no adjustment for the number of days the owner has owned the units up to the record date.
The owner on the record date gets the full interest distribution for the month, even if the owner has only owned the unit for that day.
My comment demonstrates I don't fully understand this product. Correct me if I'm wrong (and probably am): If I buy, say early month at 50.00 and sell mid-month before ex-dividend date, I receive interest for the full month? If so, why not buy at 50.00 and sell just before ex-dividend date, cash in the capital gain and get interest on top? What am I missing here?
6:40 pm
April 6, 2013
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If you sell before the ex-dividend date, then the transaction will settle (ownership will transfer) on or before the record date. You will not be the owner of the units on the record date and, consequently, will not receive the interest payment for that month. Hopefully, there will be a buyer who will bid $50 plus the accrued interest so far for the units.
The ex-dividend date is the first day something trades without the right to the dividend.
8:00 pm
December 29, 2018
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I gather from this that the ask size should be 0 just before the ex-dividend date.
7:27 am
April 6, 2013
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Not necessarily.
Some owners of the PSA units may need to cash out around that time and would try to sell their units. Such sellers know they will not receive the upcoming payout and will ask for a bit more, knowing that the buyer would receive it.
The prospective buyer knows he/she will receive that payout and could bid a bit more, knowing the upcoming payout will compensate. However, there is no requirement to do so.
Buyer can look around and see that the highest bid at the moment is just $49.99, even though the distribution will be, let's say 5¢. Buyer could then bid $50.
If a seller accepts, then the buyer would get units for $50 and also get the upcoming 5¢ distribution for owning the units just a few days.
2:09 pm
October 27, 2013
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I suspect the normal Bid/Ask spread will be 1-2 cents of NAV. That said, I am curious enough to watch real time level 2 quotes off and on for the next two weeks to see what transpires.
6:07 pm
December 29, 2018
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I want to thank posters here and specially Norman1 and AltaRed for their comments in helping me & everyone to understand this product. Initially, I wasn’t catching the transfer of ownership which includes the interest transfer to the new buyer. Thanks!
Morningstar still shows 2,17% yield but the funds corporate site is now showing 1,15%
I fiddled around with a calculator and it is possible to buy low and sell high and make a little more than 1,15%, but you need a great deal of units to get a better yield including buying & selling fees (some brokers charge more fees). If all goes well you could eke out a little more than 2%, less than say Laurentian digital bank (2,25%). However, if you’re stuck with cash in a brokers registered account, PSA may be for you !
6:51 pm
October 27, 2013
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You also need to be with a broker with low, or zero, commissions to buy/sell PSA
6:59 pm
December 29, 2018
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I know, TD and RBC brokerage firm doesn't offer PSA. I'm with Questrade. ETF fees are the following: buy: .0035 per share, sell: .01 per share, minimum 4.95 to a maximum of 9.95 + .0035 per share.
10:14 am
October 27, 2013
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AltaRed said
I suspect the normal Bid/Ask spread will be 1-2 cents of NAV. That said, I am curious enough to watch real time level 2 quotes off and on for the next two weeks to see what transpires.
As I mentioned, I've decided to watch: 1) the Bid/Ask spread on PSA, and 2) watching any spread from NAV. So far.....
1) the market maker is maintaining a 1 cent spread with huge large Bid/Ask volumes via broker #7. The market maker may also be present at the next Bid/Ask quotes in real time Level 2 quotes
2) Bid price is spot on prior day NAV. Ask is one cent higher. That stands to reason since Purpose isn't going to price their Ask at less than NAV. It should be spot on except for when true NAV is between the 1 cent spread, at which point it should be the next highest cent.
Today's example: Yesterday's NAV was $50.04, Today Bid is $50.04 and Ask is $50.05 as it should be.
I doubt this ETF would rarely be mis-priced by more than 1 cent unless the market maker is NOT present in the market.
1:58 pm
December 29, 2018
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I bought in last week at 50.04 and at that precise moment the bid was at 50.03 and ask at 50.05 and last price traded at was 50.03. I didn't bother to make an offer at bid price, I figured I wouldn’t get it, but even so, I got most of my shares at 50.03 (partially filled) and the rest at 50.04. I was more than ok with that !
6:11 pm
October 27, 2013
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NAV last week was about $50.03 and this week started around $50.04. By the end of this week, it may reach $50.05.
They don't quote NAV at fractions of a cent but probably should for accuracy, even if one cannot bid/ask at that level.
Given declining interest rates, it is unlikely to get past $50.06 this month before going ex-dividend.
8:12 pm
December 29, 2018
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AltaRed said
NAV last week was about $50.03 and this week started around $50.04. By the end of this week, it may reach $50.05.They don't quote NAV at fractions of a cent but probably should for accuracy, even if one cannot bid/ask at that level.
Given declining interest rates, it is unlikely to get past $50.06 this month before going ex-dividend.
I agree, no more than 6 cents
7:31 pm
April 6, 2013
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AltaRed said
…
Today's example: Yesterday's NAV was $50.04, Today Bid is $50.04 and Ask is $50.05 as it should be.I doubt this ETF would rarely be mis-priced by more than 1 cent unless the market maker is NOT present in the market.
Those bids and asks are the inside of the market. That inside can be quite thin.
This is a partial Level II quote of PSA around 3:45 pm a few days ago:
| Bid | Ask | ||||
| Orders | Shares | Price | Price | Shares | Orders |
| 1 | 9500 | $50.040 | $50.050 | 171600 | 8 |
| 6 | 50700 | $50.030 | $50.060 | 51900 | 6 |
| 2 | 1100 | $50.020 | $50.070 | 200 | 1 |
| 5 | 2300 | $50.010 | $50.080 | 600 | 2 |
| 4 | 8200 | $50.000 | $50.090 | 400 | 3 |
That top bid at $50.04 was only good for 9,500 units or about $475,000 worth.
Those eight sell offers for $50.05 better not become desperate. They would clobber the buyers if those 171,600 units became market orders!
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