Hi all
I have a question about ETFs. Their tax effectiveness and ability to keep the ETF share price close to the value of the underlying stocks rely on arbitrage between EFT shares and actual shares of the stocks used.
How does this work for US market ETFs of foreign stocks that are not ADRs? Don’t time zone differences make price arbitrage difficult and lessen the likelihood of the tax effectiveness as well? Likewise, wouldn't there need to be similar regulations at the foreign exchanges to enable this.
I'm still trying to understand the advantage of an ETF vs foreign fund if aside from lower cost and index based.
Michael
I have a question about ETFs. Their tax effectiveness and ability to keep the ETF share price close to the value of the underlying stocks rely on arbitrage between EFT shares and actual shares of the stocks used.
How does this work for US market ETFs of foreign stocks that are not ADRs? Don’t time zone differences make price arbitrage difficult and lessen the likelihood of the tax effectiveness as well? Likewise, wouldn't there need to be similar regulations at the foreign exchanges to enable this.
I'm still trying to understand the advantage of an ETF vs foreign fund if aside from lower cost and index based.
Michael