How does the NAV relate to the market price of TLT. Currently the NAV is about 105 versus TLT about 120+.
Does it mean NAV is calculated at a higher expected interest rate and TLT buyers are expecting a low rate?
NAV and TLT
Moderator: Global Moderator
Re: NAV and TLT
I was referring to the Yahoo finance pae for TLT Quotes as shown below. The NAV refers to Oct 6. The price on Oct 6 also seems to be around 121-122. Tells me it is a bad idea not to check on the original source form Ishares
Prev Close: 121.98
Open: 121.17
Bid: 120.27 x 100
Ask: 120.49 x 100
NAV¹: 105.64
Net Assets²: 3.34B
YTD Return (Mkt)²: 4.32%
Day's Range: 120.57 - 121.26
52wk Range: 109.69 - 132.21
Volume: 6,932,539
Avg Vol (3m): 6,347,200
P/E (ttm)²: N/A
Yield (ttm)²: 2.80
¹As of Oct 6, 2010²As of Sep 30, 2012
Prev Close: 121.98
Open: 121.17
Bid: 120.27 x 100
Ask: 120.49 x 100
NAV¹: 105.64
Net Assets²: 3.34B
YTD Return (Mkt)²: 4.32%
Day's Range: 120.57 - 121.26
52wk Range: 109.69 - 132.21
Volume: 6,932,539
Avg Vol (3m): 6,347,200
P/E (ttm)²: N/A
Yield (ttm)²: 2.80
¹As of Oct 6, 2010²As of Sep 30, 2012
Re: NAV and TLT
That process, and the relative ease of it, is why ETF trade prices will, in general, track their NAV much more closely than closed end funds.Slotine wrote: Any time it deviates enough to be worthwhile the trading costs, someone will arbitrage it by buying the underlying treasuries and short TLT (or vice versa). They'll then create ETF blocks at the daily posted NAV value (not the IV) and clear out that short.
It also indicates why thinly traded or unpopular niche funds can have a wide spread. Nobody is interested or able to perform that arbitrage.
Normal mutual funds don't have this problem because they don't trade. All buy and sell happens at the end of the day after they calculate their NAV, and those transactions happen at the NAV (ignoring fees of various kinds which may or may not be assessed).