Treasurys for Sale
Moderator: Global Moderator
Re: Treasurys for Sale
I wouldn’t worry anymore than you would worry about a spread when selling an ETF.
- Kriegsspiel
- Executive Member
- Posts: 4052
- Joined: Sun Sep 16, 2012 5:28 pm
Re: Treasurys for Sale
Since KGB wasn't very helpful, I'll offer a wild guess! I wonder if Vanguard uses a wider spread to get a bond from the primary purchaser into the secondary market to recoup higher associated costs. Then when they broker secondary market trades, their spread is smaller. That's how they make money without charging commission.
You there, Ephialtes. May you live forever.
- dualstow
- Executive Member
- Posts: 14308
- Joined: Wed Oct 27, 2010 10:18 am
- Location: synagogue of Satan
- Contact:
Re: Treasurys for Sale
hmm, makes sense.Maybe that’s it.
Re: Treasurys for Sale
Details of how this is done at your brokerage should be available from them via a disclosure. It may take some digging.
Re: Treasurys for Sale
Details of how this is done at your brokerage should be available from them via a disclosure. Finding it may take some digging.
The main point to all of this is that bonds also have bid/ask spreads just like stocks, ETFs, futures, options etc. Some brokerages are more transparent about it.
The main point to all of this is that bonds also have bid/ask spreads just like stocks, ETFs, futures, options etc. Some brokerages are more transparent about it.
Re: Treasurys for Sale
On the secondary market, I’ve noticed that sometimes smaller trades or odd-sized trades have higher spreads than the large trades involving nice, round numbers. Whereas at auction, I believe the size of your purchase makes no difference.
But for a PP investor who is trading bonds only a couple of times a year at the most, the secondary market spreads are negligible when viewed as an annualized “expense ratio.” Lower than most Treasury ETFs, I would think.
But for a PP investor who is trading bonds only a couple of times a year at the most, the secondary market spreads are negligible when viewed as an annualized “expense ratio.” Lower than most Treasury ETFs, I would think.