ETF základy
NAV vs. Market Price of an ETF: When and Why They Differ
Key takeaways
- NAV (Net Asset Value) is calculated once a day after the market closes and reflects the total value of the underlying securities held by the fund.
- The market price of an ETF changes every second during trading and can temporarily deviate from NAV in either direction.
- A deviation above 0.5% for large UCITS ETFs should catch your attention — for smaller or less liquid funds, larger gaps are common.
- The creation/redemption mechanism keeps the market price close to NAV through arbitrage conducted by authorized participants.
- When buying, use a limit order instead of a market order to eliminate the risk of purchasing at the peak of the spread.
NAV (Net Asset Value) is the accounting value of one ETF unit calculated from its underlying assets; the market price is the actual price at which you buy or sell the ETF on the exchange. These two values move very close to each other most of the time — but not always, and understanding why will help you invest more intelligently.
How is NAV calculated?
The fund manager adds up the current market value of all securities in the portfolio, subtracts liabilities, and divides by the number of units issued. For European UCITS ETFs, this calculation is typically performed once a day after market close. During the day, exchanges publish iNAV (indicative NAV) — a running estimate updated every 15–30 seconds.
Why does the market price differ from NAV?
The market price is the result of supply and demand on the exchange. It can move above NAV (premium) or below NAV (discount) for several reasons:
- Low ETF liquidity: less actively traded funds have a wider bid-ask spread.
- Closed underlying markets: if you trade an ETF on Asian equities in the morning in Prague, Asian exchanges are closed — the iNAV is stale.
- Market stress: during heavy sell-offs, the market price can temporarily fall below NAV.
- High demand: trendy themes (AI, green energy) can push an ETF's price above NAV.
Who keeps the deviation from becoming permanent?
Authorized participants — large banks and market makers — can create new ETF units directly with the fund manager or redeem them at any time. If the market price significantly exceeds NAV, they buy the underlying shares, exchange them for new ETF units, and sell on the exchange. This arbitrage pushes the price back down. This mechanism is why large UCITS ETFs (AUM above €500 million) typically maintain a deviation below 0.1–0.2%.
What to check before buying
On the fund manager's website or on justetf.com, look for the "Premium/Discount" tab. Compare the average 30-day deviation — that tells you more than a single snapshot. A large fund with an ISIN starting with "IE" (Irish domicile) will generally trade closer to NAV than a smaller Luxembourg-domiciled fund. For more on fund domicile, see the article on Irish domicile and its tax advantages.
More on how to select an ETF is available in our ETF section.
FAQ
What is NAV in an ETF?
NAV (Net Asset Value) is the value of one fund unit calculated from the market price of all underlying assets minus the fund's liabilities. It is typically calculated once a day and serves as the "anchor point" for the ETF's market price.
How large a deviation between market price and NAV is normal?
For large, actively traded UCITS ETFs, the deviation is typically below 0.2%. For less liquid or niche funds, it can reach 1–2%. A persistent premium or discount above 0.5% for mainstream funds should be treated as a warning sign.
Why is a limit order recommended when buying an ETF?
A market order forces you to accept the current ask price, which may be temporarily inflated. A limit order ensures you buy at no more than your specified price, protecting you from unintentionally purchasing at a premium.