I’ve been interested in investing with a NAV arb strategy, taking advantage of when the market price of an ETF is lower than its net asset value. I was wondering if anyone has insight on 3 questions I have before I dive in.
1) Are there ever legitimate reasons for an ETF or closed end fund to trade at a discount to NAV?
2) Is “reverse normalization” a thing? Where normally the fund’s market price normalizes to the NAV of underlying stocks, would the underlying stocks ever normalize to the discounted fund market price?
3) How does the high prevalence of algo traders affect technical charts/patterns? Can I rely on normal entry/exit technical indicators?
Figured I’d ask and see if I can get a better feel for the strategy. Obviously these questions are somewhat subjective so please share if you have any thoughts. Thanks all who read :)
Submitted November 09, 2020 at 07:30PM by 2penises_in_a_pod https://ift.tt/38t2ZM8
