Tag Archives: Net Asset Value

All About the ETF (Exchange Traded Fund) The Dangers (Part 3)

Earlier here in the first part of our ETF Post from our coming Q2 Newsletter, we spoke of the creation and massive growth.

In the Second Part here of our ETF Post we showed the large number of different asset classes the ETF’s are now available …. and growing fast….

Here is a reminder, of just how many Assets ETF’s now encompass..


The NAV or Net Asset Value – Discount, Premium and Mismatch

NAV Or Net Asset Value is the true value of the underlying assets… recall the ETF is a basket of assets, originally the first, SPY or “Spider” the S and P 500 Stocks (US large company stocks)….

The SPY is easily tracked, rarely deviates from the underlying value (NAV) and trades very liquid (constantly).

Far away from core indexes, there are now ETF’s that currently trade instantly but have holdings that in some cases may take days, weeks, or even months to liquidate the underlying asset.

Logically… A mismatch of this magnitude can lead to a miss pricing of the asset, especially during stress.

Examples include, floating rate funds, high yielding (low quality) or synthetic types of ETF’s.

As a best practice, staying away from unique and small ETF’s is a good idea.

Have a Great “Which ETF’s to Avoid” Day!

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.