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I've got a general investing question, please don't bite.
Why do some funds (specifically closed-end) trade at a discount from NAV?
I did some google searches and found this:
Unlike regular open-end mutual funds, which are bought and sold directly from the fund company at the net asset value (NAV) of their portfolio securities, ETFs and closed-end funds trade at prices determined by the market forces of supply and demand. A fund that trades at a price less than its NAV is said to trade at a discount to its NAV.
My question is why would an ETF trade at a discount. If I have basket of $100 bills someone should be willing to trade me $100 for $100. If someone can buy a $100 for $80 why would they not?
Why do some funds (specifically closed-end) trade at a discount from NAV?
I did some google searches and found this:
Unlike regular open-end mutual funds, which are bought and sold directly from the fund company at the net asset value (NAV) of their portfolio securities, ETFs and closed-end funds trade at prices determined by the market forces of supply and demand. A fund that trades at a price less than its NAV is said to trade at a discount to its NAV.
My question is why would an ETF trade at a discount. If I have basket of $100 bills someone should be willing to trade me $100 for $100. If someone can buy a $100 for $80 why would they not?