Comments on: ETF underlying value http://www.indextown.com/archives/2006/09/14/etf-underlying-value/ Personal finance and investing in mutual funds and ETFs Wed, 31 Aug 2011 13:13:14 +0000 hourly 1 http://wordpress.org/?v=3.1.3 By: indexfundfan http://www.indextown.com/archives/2006/09/14/etf-underlying-value/comment-page-1/#comment-141 indexfundfan Sat, 16 Sep 2006 16:47:27 +0000 http://www.indextown.com/archives/2006/09/14/etf-underlying-value/#comment-141 TM, thanks for your thoughts. I haven't thought from your angle of the words "real-time" when I made the post. Let me clarify that my intend of using the words "real-time" was to distinguish it from the "delay-quote" associated with the stock quotes from Yahoo finance. This means that at any time instant during a trading day, the Yahoo finance quote for VWO is actually 15 to 20 minutes delayed compared to the quote from ^HVO. TM, thanks for your thoughts. I haven’t thought from your angle of the words “real-time” when I made the post. Let me clarify that my intend of using the words “real-time” was to distinguish it from the “delay-quote” associated with the stock quotes from Yahoo finance.

This means that at any time instant during a trading day, the Yahoo finance quote for VWO is actually 15 to 20 minutes delayed compared to the quote from ^HVO.

]]> By: Tim Buchman http://www.indextown.com/archives/2006/09/14/etf-underlying-value/comment-page-1/#comment-139 Tim Buchman Sat, 16 Sep 2006 13:12:52 +0000 http://www.indextown.com/archives/2006/09/14/etf-underlying-value/#comment-139 I generally agree with your thoughts, but I'm concerned about the accuracy of the statement that "the stock exchanges publish the real-time NAV of ETFs". The prospectus for VWO says, "The Fund employs a “passive management”—or indexing—investment approach by investing substantially all (normally about 95%) of its assets in the common stocks included in the Select Emerging Markets Index." So if we check the value of 100% of ^HVO, there is a substantial margin of error (much less than 5%, yes) in our attempt to learn the NAV of VWO. I also worry about various forms of "stale inventory" - that is, suppose we just happen to buy VWO a day after the index is reconstituted? I agree that these errors are relatively small, especially for a long-term investor. But the information we're hoping to capture about premiums/discounts is of the same order of magnitude. I generally agree with your thoughts, but I’m concerned about the accuracy of the statement that “the stock exchanges publish the real-time NAV of ETFs”. The prospectus for VWO says,

“The Fund employs a “passive management”—or indexing—investment approach by investing substantially all (normally about 95%) of its assets in the common stocks included in the Select Emerging Markets Index.”

So if we check the value of 100% of ^HVO, there is a substantial margin of error (much less than 5%, yes) in our attempt to learn the NAV of VWO. I also worry about various forms of “stale inventory” – that is, suppose we just happen to buy VWO a day after the index is reconstituted?

I agree that these errors are relatively small, especially for a long-term investor. But the information we’re hoping to capture about premiums/discounts is of the same order of magnitude.

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