Difference in share price of US ETF vs UCITS ETF tracking the same benchmark

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Topic Author
ags
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Difference in share price of US ETF vs UCITS ETF tracking the same benchmark

Post by ags »

Greetings,

I refer to the iShares Global Clean Energy ETF. The ticker for the US domiciled ETF is ICLN. The UCITS ETF (IE00B1XNHC34) Swiss Exchange ticker is INRG. ICLN currently trading at U$22.80 vs INRG at U$12.414

Both of them track the same index S&P Global Clean Energy Index.

Can someone please help me understand what could be causing this significant differnce in NAV? As a US NRA, I prefer to go with the UCITS, but I am curious as to what causes this difference.

Thanks in advance.
AlohaJoe
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Re: Difference in share price of US ETF vs UCITS ETF tracking the same benchmark

Post by AlohaJoe »

ags wrote: Mon Mar 08, 2021 1:52 am I refer to the iShares Global Clean Energy ETF. The ticker for the US domiciled ETF is ICLN. The UCITS ETF (IE00B1XNHC34) Swiss Exchange ticker is INRG. ICLN currently trading at U$22.80 vs INRG at U$12.414

Both of them track the same index S&P Global Clean Energy Index.

Can someone please help me understand what could be causing this significant differnce in NAV?
Share price is meaningless. It literally means nothing. It doesn't mean they have a different NAV. If one of those ETFs did a stock split tomorrow it would have exactly the same NAV but a different share price.

Share price doesn't tell you anything about NAV but the funds do have different NAVs but...why should two different funds have the same NAV? One fund was launched in 2007, the other in 2008. One has an expense ratio of 0.46%, the other 0.65%. Why would you expect them to have exactly the same amount of money invested in them?

NAV just means "the amount of money invested in this ETF".

Just because two funds both track the same index doesn't mean they've attracted the same number of investors. If I set up the AlohaJoe S&P 500 Index Fund ETF tomorrow, I'm not going to have the same Net Asset Value as Vanguard's S&P 500 fund.
TedSwippet
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Re: Difference in share price of US ETF vs UCITS ETF tracking the same benchmark

Post by TedSwippet »

AlohaJoe wrote: Mon Mar 08, 2021 2:11 am If one of those ETFs did a stock split tomorrow it would have exactly the same NAV but a different share price.
Not really. It would have exactly the same AUM, (assets under management) but a different NAV.
AlohaJoe wrote: Mon Mar 08, 2021 2:11 am NAV just means "the amount of money invested in this ETF".
The NAV is the amount of money invested in the ETF (AUM) divided by the number of shares issued by the ETF. You are right though that an ETF's share price and NAV are essentially meaningless, just accounting and measuring conveniences. So comparing NAVs and share prices across different ETFs is also meaningless.

For more, see: Net asset value - Bogleheads
AlohaJoe
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Re: Difference in share price of US ETF vs UCITS ETF tracking the same benchmark

Post by AlohaJoe »

TedSwippet wrote: Mon Mar 08, 2021 3:03 am The NAV is the amount of money invested in the ETF (AUM) divided by the number of shares issued by the ETF.
I think it is used somewhat interchangeably (and perhaps confusingly) to mean both things. I'm sure I've used it both ways myself.

That said, the SEC says that NAV is not a per-share price: they distinguish between "NAV" and "per share NAV", which is probably the most technically correct way to phrase it but I doubt anyone ever actually does :D

https://www.investor.gov/introduction-i ... sset-value
TedSwippet
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Re: Difference in share price of US ETF vs UCITS ETF tracking the same benchmark

Post by TedSwippet »

AlohaJoe wrote: Mon Mar 08, 2021 3:47 am I think it is used somewhat interchangeably (and perhaps confusingly) to mean both things.
Confusing indeed. Best to stick to one common usage.

In the specific context of mutual funds and ETFs the most common -- and certainly, most useful! -- understanding would be 'per-share NAV'. This is the value that an ETF provides when it publishes its NAV.

How to Calculate the Value of an ETF
Net Asset Value
Both mutual funds and ETFs calculate NAV, or net asset value, at 4 pm EST. The NAV is the value of each share measured by the value of all the fund’s underlying holdings at their closing prices. However, because the ETF trades throughout the day, there are times when the NAV and the actual market price differ, although the differences tend to be minuscule. Therefore, for calculation purposes, the most readily available measure to use is the NAV, but if you need to calculate more precise performance, then you can use the intraday net asset value (iNAV) if available.
Topic Author
ags
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Re: Difference in share price of US ETF vs UCITS ETF tracking the same benchmark

Post by ags »

Thanks to both of you for the explanation.
Suliman
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Re: Difference in share price of US ETF vs UCITS ETF tracking the same benchmark

Post by Suliman »

AlohaJoe wrote: Mon Mar 08, 2021 2:11 am
ags wrote: Mon Mar 08, 2021 1:52 am I refer to the iShares Global Clean Energy ETF. The ticker for the US domiciled ETF is ICLN. The UCITS ETF (IE00B1XNHC34) Swiss Exchange ticker is INRG. ICLN currently trading at U$22.80 vs INRG at U$12.414

Both of them track the same index S&P Global Clean Energy Index.

Can someone please help me understand what could be causing this significant differnce in NAV?
Share price is meaningless. It literally means nothing. It doesn't mean they have a different NAV. If one of those ETFs did a stock split tomorrow it would have exactly the same NAV but a different share price.

Share price doesn't tell you anything about NAV but the funds do have different NAVs but...why should two different funds have the same NAV? One fund was launched in 2007, the other in 2008. One has an expense ratio of 0.46%, the other 0.65%. Why would you expect them to have exactly the same amount of money invested in them?

NAV just means "the amount of money invested in this ETF".

Just because two funds both track the same index doesn't mean they've attracted the same number of investors. If I set up the AlohaJoe S&P 500 Index Fund ETF tomorrow, I'm not going to have the same Net Asset Value as Vanguard's S&P 500 fund.

Nice, save for later.
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