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Investment advice and corporate finance
Module 12Investment Management and Corporate FinanceAn ETF's NAV is RM2.10 a unit and its units trade at RM2.14 on Bursa Malaysia. What is the premium to NAV, and what tends to close it?
Premium = (price ÷ NAV − 1) × 100 = (2.14 ÷ 2.10 − 1) × 100 = 1.9%. When units trade above NAV, participating dealers can buy the underlying basket, create new units at NAV and sell them at the higher market price, an arbitrage that pushes the price back towards NAV. 4.0% is the sen difference read as a percentage. Cancelling units or retail redemptions would not close a premium. Source: SIDC Module 7 Study Outline (Jul-Dec 2026) Topic 7 Exchange-traded Funds; SC Guidelines on Exchange-Traded Funds (revised, in operation from 2 January 2019; SC media release 'SC revises ETF guidelines to boost retail participation', sc.com.my) (as at October 2026).
Overlooking the creation/redemption arbitrage that keeps ETF prices near NAV.
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