Global markets are open all the time, but not all at the same time due to time differences. According to a study from Lipper, this can effect the price and performance of exchange traded funds.
While their study focused on European markets, it’s safe to assume this applies to all other markets not in the same U.S. time zone.
Lipper found that European ETFs have a potential for deviation from their underlying index. While European markets are open in the morning, the U.S. markets are closed. These ETFs are trading based on expectations, however at the point in time when both markets are open, they work together. These ETFs must account for currencies as well.
Recent high volume selling in global markets have provided many instances where ETF prices were not reflective of their corresponding indexes.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.