FYI: ETFs typically trade at something close to “fair value.” That is, if you calculated the intraday value of all the securities an ETF holds, that would roughly align with the price of the ETF.
The process that keeps ETFs trading at “fair value” is the creation/redemption mechanism (explained on page 14). If, at any time, the price of the ETF deviates from the price of the underlying portfolio, institutional investors can swoop in and arbitrage the difference.
Regards,
Ted
http://www.etf.com/sections/features-and-news/etf-education-fixed-income-etfs-during-panic
