ETF Pricing Subject To Whipsaw, Index Mutual Funds Are Not
Mark Noble wrote an interesting piece on one of the hurdles that ETF providers are facing with respect to mis-pricing and tracking error. In the article he notes that on one particular day XIN (which tracks the C$ hedged MSCI EAFE index) opened up 63.93% higher than the previous day’s close whereas the actual index was only up 7.93%. Index mutual funds simply price at end of day NAV after all the dust has settled and are not subject to the potential tracking error whipsawing that ETFs can be.
For more information, please click here to read the original article written by Mark Noble on ADVISOR.CA
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