In case of Mutual Funds (Index funds eg. Franklin India Index fund Nifty), all purchases /sales are done at the NAV for that day and lets say if Nifty advances by 2% in 1 day, then the NAV also increases by around 2%.
However, ETF's are counted as equity & I have a doubt here. I can see that ETF options have a buy / sell price. Lets say Nifty ETF. The purpose of ETF is to closely approximate the underlying. This can be done if you are working with the NAV concept .. but when you have bidder and sellers who are all willing to buy / sell at different price, will it still be able to approximate Nifty ? Should it not be very volatile where graph would swing above and below nifty ?
Thanks,
However, ETF's are counted as equity & I have a doubt here. I can see that ETF options have a buy / sell price. Lets say Nifty ETF. The purpose of ETF is to closely approximate the underlying. This can be done if you are working with the NAV concept .. but when you have bidder and sellers who are all willing to buy / sell at different price, will it still be able to approximate Nifty ? Should it not be very volatile where graph would swing above and below nifty ?
Thanks,
