§ 01
| Scenario | Price vs NAV | Common In |
|---|---|---|
| Premium | Price > NAV (you pay more than holdings are worth) | Popular ETFs during market euphoria |
| At NAV | Price = NAV (fair value) | Most liquid ETFs most of the time |
| Discount | Price < NAV (you pay less than holdings are worth) | Bond ETFs during market stress |
§ 02
For liquid US equity ETFs, the gap is usually under 0.1% thanks to Authorized Participants who arbitrage away differences. Bond and international ETFs can have larger gaps.
§ 03
Check an ETF's current price versus its NAV. The premium/discount tells you if you are getting a fair deal.
§ 04
§ 05
An ETF trades at $101 but its NAV (calculated from underlying holdings) is $100. A 1% premium. What's going on and what does it mean?
Five questions · AI feedback
Sit with the ideas.
An ETF has a NAV of $100 but trades at $98. What is this called?
Why: