FIRST TIME INVESTOR
What keeps ETF prices aligned with the index?
How do ETFs like VAS ensure their price tracks the index they follow? I understand there’s rebalancing and "in specie" contributions based on the index, but I don’t see how this guarantees the ETF price matches the index. For example, if VAS is trading at $85 and the ASX300 is at 6700, what stops VAS from rising to $90 while the ASX300 drops to 6500? Does VAS issue more shares or buy more of the index to align its NAV? And is it traders who keep the ETF price and NAV in sync? I’m struggling to see how this mechanism works in practice. Can anyone explain?
Sophie Wilson.
22 January 2025
0 Comments
4000 characters left
Related posts
First Time Investor
If only I had only known ...
Lets share our best first mistakes with investing.... I can go first, I didn't know that dividends that are reinvested ...
First Time Investor
Moving from Micro
Hi there, I am a low income mum of 3 trying to invest for our future. I am currently investing with automated payments ...
First Time Investor
G'day how are you all going my name is Dave l'm new to Pearler
Dave Here, I would like to say I'm excited about joining the Pearler family, I'm not working at the moment I work in the...