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ETP Price
Investors can buy and sell ETPs on an exchange through a broker, the same way as shares, using a typical bid/ask spread at the time of the trade, which usually differs from the ETPs Net Asset Value (NAV).
ETPs are open-ended instruments, which means that ETPs can be created and redeemed to match investors demand, which helps the price of the units to stay close to the Net Asset Value of the ETP. This differs from shares in a company, where the price fluctuates based on investor’s demand.
Generally, during the trading day the price of an ETP will be determined by how much the underlying asset has risen or fallen from its closing price the day before.
The price of an ETPs should be close to the NAV per unit, but at times, when the underlying assets prices undergo large changes, the price of the ETP could move away from the NAV.
ETP Net Asset Value (NAV)
Basically, an ETP NAV is the sum of all its underlying assets, less liabilities, all divided by the number of securities and is generally an indication of the fair value of the ETP.
An ETP calculates its official NAV at the end of each day using closing market prices of its underlying asset (i.e., from the closing price of the underlying asset in a given day to the next day’s close).
In theory, the price of an ETP should be determined by its NAV divided by the number of securities. The NAV will fluctuate depending on the price movements of the underlying assets which, in turn, will alter the price of each ETP security.
Tracking overseas instruments during EU hours
Challenges arise when an ETP holds securities trading in a different time zones, because the NAV is based on the last price when the exchange for the underlying asset closes.
For example, an ETP that trades on the London Stock Exchange (LSE) but tracks Tesla which trades in the U.S., will hold securities trading on the NASDAQ. When the LSE closes at that point the ETP’s closing price is “struck.” However, for another 5 hours, the underlying Tesla shares will still be trading on the NASDAQ.
Usually, a lot happens during those 5 hours that could affect the value (NAV) of the ETP. However, the closing price of the ETP will remain unchanged/stationary because the LSE is closed, and only the ETP’s NAV will reflect any changes in value over the 5 hours. In this case, the ETP’s NAV has changed, but the closing price of the ETP has not. As a result, a difference between the ETP’s closing price and its NAV can appear as shown in the diagram below.
In conclusion:
It is crucial to understand that the NAV is the only reference price which will accurately provide the relationship between the underlying asset’s performance and the ETP’s performance. Therefore, when comparing the performance of the ETP to its underlying, the previous NAV must be used as reference point.
Because the end of day NAV is calculated when the U.S. exchanges close, not when the ETP was last traded on the European exchange, there is discrepancy between the ETPs price and the NAV.
Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at
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Società
This is a marketing communication. Please refer to the Prospectus of the ETPs and to the KIID before making any final investment decisions.
This information originates from Investium Limited, which has been appointed as distributor of Leverage Shares products in Europe by Leverage Shares Management Company Limited (the “Arranger”). Investium Limited with registered address at 6 Nikou Georgiou Street, Office 302, 1095 Nicosia Cyprus, is a financial services provider regulated by the Cyprus Securities and Exchange Commission (CySEC).
The information is intended only to provide general and preliminary information to investors and shall not be construed as investment, legal or tax advice. Investium Limited and the Arranger (together referred as “Leverage Shares”) assume no liability with regards to any investment, divestment or retention decision taken by the investor on the basis of this information. The views and opinions expressed are those of the author(s) but not necessarily those of Leverage Shares. Opinions are current as of the publication date and are subject to change with market conditions. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results. Information provided by third party sources is believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed.
All performance information is based on historical data and does not predict future returns. Investing is subject to risk, including the possible loss of principal. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Leverage Shares.
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Information contained in this website is intended only to provide general and preliminary information and does not constitute any legal or investment advice, an offer to sell or solicitation to buy any security, including shares of any Exchange Traded Products (“ETPs”).
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Information contained in this website is intended only to provide general and preliminary information to EU regulated firms such as Investment Intermediaries and Asset Managers. This information does not constitute an offer to sell or solicitation to buy any security, including shares of any Exchange Traded Products (“ETPs”).
An investment in the promoted ETPs may only be made based on the ETPs´ legal documentation and will be subject to terms and conditions contained therein.
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions. The ETPs shown on this website are not available for sale in the U.S. or to a U.S. person.
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This website is for informational purposes only.
This website is accessible to retail investors in the UK for informational purposes only. Leverage Shares does not directly distribute to retail investors. Retail clients should not rely on any of the information provided and should seek assistance from an IFA for all investment guidance and advice.
Information contained in this website is intended only to provide general and preliminary information and does not constitute any legal or investment advice, an offer to sell or solicitation to buy any security, including shares of any Exchange Traded Products (“ETPs”).
An investment in the promoted ETPs may only be made based on the ETPs´ legal documentation and will be subject to terms and conditions contained therein.
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions. The ETPs shown on this website are not available for sale in the U.S. or to a U.S. person.
I acknowledge having my legal residence in the selected location.
Please confirm the Terms and Conditions by clicking on “I agree”
This website is for informational purposes only.
Information contained in this website is intended only to provide general and preliminary information to FCA regulated firms such as Independent Financial Advisors (IFAs) and Wealth Managers. This information does not constitute an offer to sell or solicitation to buy any security, including shares of any Exchange Traded Products (“ETPs”).
An investment in the promoted ETPs may only be made based on the ETPs´ legal documentation and will be subject to terms and conditions contained therein.
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions. The ETPs shown on this website are not available for sale in the U.S. or to a U.S. person.
I acknowledge having my legal residence in the selected location.