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Strategies & Market Trends : Underexposed Technical Analysis
AQN 5.805+0.6%11:19 AM EST
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From: Underexposed8/11/2019 10:17:50 AM
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DIS: I need help understanding how the price of an ETF changes during the trading day

I must confess that I have never put money into an ETF. I know it is like a tradeable Mutual Fund and I have a negative experience with Mutual Funds decades ago which put me off any investment vehicle that was based on a collection of stocks.

I have been reading a relatively easy to read article on the subject of ETFs.

A primer on ETF valuation

and it describes the components of an EFT as follows:
  1. Net asset value: This is the most recent official value of the ETF based on most recent market close.
  2. Intraday indicative value: This is the calculation of the most recent value of the fund based on market prices of the underlying securities.
  3. Total and estimated cash: The total and estimated cash amounts are the amount of excess cash in the fund. These numbers are used to calculate how much balancing cash will be required when doing a creation or redemption.
  4. Shares outstanding: The shares outstanding of the fund are how many shares have been issued and can change daily with creations and redemptions.
  5. Accrued dividends (certain funds only): These are dividends collected from all the companies in the index and normally paid to investors quarterly
And then goes on to describe each component and some trading tactics.

My question is .... are the above components computed at the beginning of the trading day and the price of the ETF adjusted based on that calculation.... and then the rest of the trading day is governed by buy/sell trading action? OR is some other dynamic involved.

They don't describe the dynamics very clear to someone who has never seen this before.

I am not convinced yet that my TA would apply to ETFs. On the surface, a quick look does not show a critical problem, but not knowing exactly how the price is manipulated makes me uneasy.

I find that article a pretty good, limited jargon read....just a little confused on small points as I described,

How are fees extracted by the managers of the ETF.? a certain percentage per day or a lump some on a scheduled basis?

Any help here is appreciated.... there appears to be tons of ETF's in Canada and the USA as you will see. Some perform quite well... others... I don't know why anyone would buy them. More about that later....

I need some feedback on this subject.... please respond.

UE
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