facebookHow is the value of an ETF determined to be overvalued or undervalued? eg. Lion-Phillip S-REIT ETF? - Seedly

Ernest Yeam Wee Leong

Content Creator at www.youtube.com/c/JustBeingErnest

07 Jun 2019

General Investing

How is the value of an ETF determined to be overvalued or undervalued? eg. Lion-Phillip S-REIT ETF?

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The value of an ETF can be measured using its net asset value (NAV).** **The ETF's NAV is the price at which shares are bought or sold from the fund company. If the NAV is lower than the market value, the ETF is said to be trading at a "premium". If the NAV is higher than the market price, the ETF is said to be trading at a "discount". One thing to note is that the NAV is usually only given at the end of the day, whereas the market prices of ETFs changes throughout the day. Another method to determine of the ETF is overvalued or undervalued is to compared the ETF in question to one of the same industry or geography.

According to historical fund performance for Lion-Phillip S-REIT ETF Fund, the benchmark index performed better than the ETF most of the time and despite a -2.6% year-to-date returns in 31 Aug 2018, the ETF still clocked a +3.0% return since inception. Comparing Lion-Phillip S-REIT ETF its one year returns are better than Phillip SGX REIT ETF (-0.74%) but losses out to Nikko AM Straits Trading Asia Ex-Japan REIT ETF return of 0.75%.

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