I have an ETF. It’s IITU and tracks things like Apple and MicroSoft. How does this work as it operates on the LSE and during Uk trading hours. But the shares within it are traded on the NYSE and Nasdaq. But, I see movement on the ETF during UK hours.
Like today. It dived off a cliff most likely due to Apples Lower earnings guidance. But, they are not trading yet on pre market at the time of writing this? Thanks
That’s an interesting question. Of course the same is true of the S&P 500 trackers like VUSA and IUSA. My expectation is that when VUSA or IITU are trading on the LSE before the US market opens, traders are taking a view as to how they expect prices to move when the market opens, or have moved since the UK market closed the previous day. Unlike OEIC funds, which are priced to NAV once a day, ETFs can be may be bought or sold at a premium or discount to the net asset value. Of course when the US market is open it would be strange for IITU to trade for something different to its NAV, else there would be arbitrage opportunity. At the end of the day the ETFs issuer makes adjustments that keep the NAV very close to the market closing price.
Do people prefer to trade IITU when the US market is open rather than closed? Here is some evidence: Yesterday (Monday Februrary 17) the US market was closed for a holiday and IITU traded, with volume 40,395. This is less than is half what is typical when the market is open. Last week the average volume per day was 87,058 and it was 117,713 the previous Monday.
However, VUSA had volume yesterday of 1,311,555 whereas for the previous month the daily volume averaged only 168,252. So VUSA was more active on a day the US market was closed. Who’d have thought?
It would be nice to have the entire range of S&P 500 sector ETFs available on T212: UIHC, UIFS, etc