Anonymous
Valuation of Ireland-Domiciled ETFs (e.g. VUSD, CSPX)?
Don't know if this is a stupid question or not but.. How do Ireland Domiciled ETFs like VUSD & CSPX track S&P500 when NYSE is closed? Or does it not? Like now (16/3/2020, 4.55PM) NYSE is still closed since Friday, does that mean CSPX isn't reflecting the true value of S&P500 yet? (and is reflecting the value as of last Friday?)
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Shengshi Chiam, CFA
16 Mar 2020
Personal Finance Lead at Endowus
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Hey, this is not a stupid question or not, it's actually a very good one!
Take a step back and the question would be - how does a etf gets a bid ask spread? And is it based on the "true value"?
Let's answer the simpler version. For a sp500 us etf trading during us trading hours, the etf fund manager and the market will be able to calculate the true "intrinsic" value of the etf, and buy/sell the etf when it significantly deviates the NAV
In the case of Irish domiciled ETFs tracking sp500, when the market is closed, the fund manager, market makers, and the market will have to rely on other factors to estimate the etf value. That will include sp500 futures.
Generally this period is when bid ask spread of the etf is wider, due to the risk involved. Hope this answers your query!!