Isn't it true that arbitrage is the primary reason ETF prices reflect the underlying securities? I'm paying a small arbitrage premium every time I buy ETF shares. It's not much, but is it worth the advantage?
ETFs are slightly more liquid. You can transact at intra-day prices rather than the closing price that day. For a long-term investor who is not a market timer, would that matter much? The only scenario I can think of where I might want to transact shares in the middle of the day is a doomsday type deal. But then if an asteroid was about to hit the Earth, what good would it do to be able to liquidate your securities before the imminent end of humanity, as opposed to after? What am I missing?
In fact, back in the day, when people invested in mutual funds by mailing in checks, they weren't guaranteed the NAV reckoned the day the mailed out the check. It would be whatever it was days or even weeks later whenever the check was processed by the fund company.
Submitted January 06, 2017 at 09:24AM by markoseugenikos http://ift.tt/2jbHe6T
