ETF prices

Welcome to our ETF education video series. In this fourth video, we’ll be focusing on the various prices associated with ETFs. If you missed our last video highlighting an understanding of secondary market metrics, be sure to catch it on our website, ThriventETFs.com.

Many investors can be surprised to learn that ETFs have multiple prices associated with them at any given point in time, but it’s something that investors should better understand. These prices include the last trade price, bid price, ask price, the intraday net asset value and the official net asset value.

Starting with last trade price, which can lead to confusion for some investors. This is the most recent price at which an ETF share traded on the exchange, and is typically the headline price shown when you pull up a quote. However, if trading activity is low or intermittent, the last trade price may not accurately represent where the ETF can be traded now. And if it’s been a while since the last trade took place, then performance metrics such as percent change on the day can also appear stale. As the name implies, last trade also reflects the price of a trade that has already happened – it doesn’t necessarily match the underlying value of the ETF or the price at which the next trade will be able to get filled.

Which leads us to the bid and ask prices. The bid is the highest price a buyer in the market is currently willing to pay. This is the price at which the first shares of a market order to sell will be filled at. The ask, on the other hand, is the lowest price a seller is currently willing to accept. Likewise, the ask then represents the current price at which the first shares of a market order to buy will be filled at.

Bids and asks are market prices. For a price representing the underlying value of an ETF during the trading session, we turn to the intraday net asset value. The intraday net asset value, sometimes also called an indicative value, is a calculation of the underlying value of an ETF’s shares throughout the day, based on its holdings. Not all ETFs publish intraday net asset value estimates, but many do. Investors can use this information to determine if the secondary market pricing is currently at a premium, at a discount, or fairly priced. But keep in mind, the information is an estimate, and may be less precise for fixed income or international ETFs.

Lastly, we have the official net asset value. Net asset value is calculated once per day, after the market closes and is the price the primary market creations and redemptions take place at. Net asset value is a useful price for some forms of premium/discount calculations, and apples-to-apples performance comparisons.

Many investors don’t realize that ETFs have multiple prices, but an understanding of what these various prices represent can help you to better choose which to utilize as you evaluate different aspects of an ETF.

Tune into the next video in this series for some tips on what to consider when it’s time to trade your ETF shares. And if you are interested in learning more about the lineup of ETFs at Thrivent Asset Management, connect with a dedicated Thrivent consultant serving regional and national accounts at ThriventETFs.com/contactus.