From the September 2013 issue of Investment Advisor • Subscribe!
Crowdsourced ETF Pricing  Sometimes determining the fair value
of a fund is a tricky business  The intraday pricing of
international equity ETFs has garnered much recent attention.
While some view the divergence between the intraday price of an
international ETF and the value of its underlying securities as
a form of a premium or discount, this is not the case at all.
Mutual funds help provide an understanding of this anomaly. Many
international equity mutual funds run into challenges with daily
purchases and redemptions when determining the right value of
underlying securities, primarily because the vast majority of
those underlying securities are not trading in their home
markets at the 4 p.m. Eastern time close of U.S. markets. A
mutual fund sponsor is then left to determine the NAV at the
best price for both buyers and sellers.  If the U.S. market’s
day is uneventful, odds are those underlying holdings are worth
approximately the same pric