if an etf has for example 100 stocks and for arguments sake lets say one percent is invested in each stock. is it trading in total sync with the outcome of all the stocks or do all the millions of shares that trade the etf cause it to not be in sync since it trades like its own stock?
I say not in sync. If i bot 100 stocks and sell the etf. The market would find a way to screw me both ways...but that is just my own experience.
Usually, the ETF trades close to the total value of the underlying stocks. If the ETF bid or ask is too far from the underlying stocks, it presents an arbitrage opportunity to buy one and short the other. Note however, that thinly traded ETFs can indeed have bid/asks far from the underlying.
The price for ETFs can be at a discount or premium to their net asset value. https://www.thestreet.com/etffocus/trade-ideas/etfs-with-the-largest-premiums-discounts-to-nav
around 12 years ago all etfs were inline with its indicative NAV. If an etf was out of line with iNAV liquidity will be an issue so you cannot just buy constituents and sell the etf and do a create end of day. What did work back then was trading tight market ETFs composed of wide market components and leg into a complete basket over time. Or as an institutional ETF MM and milk pension funds or the like
%% Good points. General rule + it applies to ETFs + stocks. Home/business, improvement contractors, can get a better deal because of better volume + most have more specific wisdom. [2] 444 plus pages[annual report/prosptcus of ETFs like TQQQ, SPXL,SSO, QLD.......; they can do things no one person or stock can, including but not limited to end of day pricing. [An advantage for me personally + it would not apply to all\ i would not want to keep up or down with 100 stocks or 500. Even if i enjoyed study of 100, 500/505 stocks ]