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Rating:IndexUniverse Attacks Real-Time ETF NAVs Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, June 24, 2013

IndexUniverse Attacks Real-Time ETF NAVs

News summary by MFWire's editors

IndexUniverse's Matt Hougan is advocating for the banning intraday net asset values. ETF providers are required to publish an iNAV every 15 seconds of every trading day for every ETF the provider offers, IndexUniverse writes.

The number is meant to represent the fair value of securities held in the portfolio that day, but it isn't the case for almost 50 percent of ETFs. Domestic equity ETFs tend to trade in line with their iNAVs, yet international equity ETFs iNAVs may not move because the market will be closed:
By now you see the problem: Because the underlying shares are closed during U.S. market hours, their prices don’t change. As a result, the iNAV hardly moves! So what happens if, at 1 p.m. ET, Fed Chairman Ben Bernanke says he’s raising interest rates 2 percent? The market will tank, and everything—including EWH —will trade lower. But EWH’s iNAV will not move, because the underlying securities are not trading.
 

Edited by: Casey Quinlan


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