ETF premium

ETF (Exchange Traded Fund) is a fund product listed and traded on a stock exchange. It can track an index, an industry or a theme, allowing investors to diversify risks, reduce costs and improve efficiency. However, the market price of an ETF is not necessarily equal to the net value of the assets it holds, which will result in a discount or premium. So, what is the ETF discount and premium? How to check and utilize ETF premium investment? This article will answer it for you.

What is the ETF discount and premium?

ETF discount and premium refer to the difference between the market price of an ETF and its net value, usually expressed as a percentage. Net Asset Value (NAV) refers to the net asset value per unit obtained by dividing all assets held by an ETF minus all liabilities by the number of units issued. Market price (Price) refers to the transaction price of ETF on the stock exchange, which is determined by market supply and demand.

ETF premium (Premium) means that the "market price" of the ETF is greater than the "net value", just like mineral water of 10 yuan, consumers are willing to buy it for 20 yuan.

ETF discount (Discount) means that the "market price" of the ETF is less than the "net value", just like mineral water of 10 yuan, consumers are only willing to buy it for 5 yuan.

How to check ETF discount and premium?

To check the ETF discount and premium, there are several methods:

One is to go directly to the official website of the ETF issuer, such as Yuanta Investment Trust, Fubon Investment Trust, Cathay Investment Trust, etc. They will provide daily or weekly ETF net value and market price information, as well as discount and premium percentages.

The other is to check on some financial management websites, such as MoneyDJ Financial Management Network, Wangu.com, etc. They will also sort out the net value and market price curves of each ETF, as well as historical discount and premium data.

Another option is to check on some foreign websites, such as Yahoo Finance, Morningstar, etc. They will also provide net value and market price information of ETFs issued in the United States or other countries, as well as discount and premium percentages.

How to take advantage of ETF premium investing?

Now that we understand what ETF discounts and premiums are and how to check them, how can we use them to invest? Here are some suggestions:

Generally speaking, if we want to hold ETFs on a certain theme or index for a long time, we should choose ETFs with smaller discounts and premiums or discounts. This can avoid buying at high prices and reduce tracking errors.

On the contrary, if we want to trade ETFs on a certain theme or index in the short term, we should choose ETFs with larger discounts or premiums, so that we can take advantage of the popularity of market demand and obtain higher returns when selling.

Of course, these are general principles, and other factors must be considered during actual operations, such as the liquidity, trading volume, handling fees, taxes, etc. of the ETF, as well as the market conditions and policy risks of the assets held by the ETF.

In addition, we should also pay attention to some ETFs with special properties, such as futures ETFs, leveraged ETFs, inverse ETFs, etc. They may be affected by the rolling of futures contracts, adjustments to leverage ratios, calculation of inverse indexes, etc. Large discounts, premiums or tracking errors require full understanding and risk awareness before investing.

Conclusion

ETF discount and premium are an important investment indicator. It reflects the market's demand and evaluation of a certain theme or index, and also affects our costs and benefits of buying and selling ETFs. We can check the discount and premium of ETFs through different channels, and choose appropriate ETFs for investment according to our own investment goals and strategies. Of course, in addition to discounts and premiums, we must also pay attention to the quality and performance of the ETF itself and the assets it holds in order to make better investment decisions.