"The large holder then drives the price down with that 5% of sales leading to a great VWAP and leads to them being issued even more shares."
Not sure I agree. This kind of arbitrage around ex-div dates, assumes that the shares they sell can be re-bought at a price below or close to what they sold them for. Then they can book the profits from better VWAP on the DRP shares.
But its a risk, and they might end up re-buying the shares at a premium and blowing their profits. Remember it takes a huge sell order by one fund to move the market.
Of course, if the fund intended to sell off some shares anyway then it might work, but not sure I agree that this is a tried and true advantage that funds have over retail investors.
BOQ $10, page-558
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