Political unrest in the Middle East and Japan’s natural and nuclear disasters have raised questions about how exchange traded funds (ETFs) operated through these crises.

The complex drama in Van Eck’s Market Vectors Egypt Index ETF (NYSEArca: EGPT) while Egypt’s stock market was closed for seven weeks provided a solid test.

The fund continued trading while Egypt’s market was shuttered and the portfolio managers used so-called fair-value pricing to determine net asset value (NAV).

The NAV for the Egypt ETF “changed throughout the long period of market shutdown, indicating that fair value pricing likely was being used — though ascertaining ‘proper’ prices for some Egyptian stocks that hadn’t traded in weeks couldn’t have been easy,” writes Morningstar’s Gregg Wolper in a Fund Spy column this week.

Edward Lopez, Van Eck’s marketing director, confirmed the company determined fair value for the portfolio while Egypt’s market was closed. ETFs disclose estimates of their NAV every 15 seconds during the trading day.

During an interview this week on the sidelines of IMN’s 2nd Annual World Series of ETFs & Indexing conference in Boston, Lopez explained Van Eck can look at factors such as the movement of the Egyptian pound, other markets and correlations as well as news and material events. Also, some of Market Vectors Egypt Index ETF’s holdings are listed in London and Canada.

Egypt closed its stock market in late January with the last trading taking place on Thursday, Jan. 27. The Egyptian market is typically closed on Friday and Saturday, but is open on Sundays.

Over the weekend, authorities said the market would not open Sunday, Jan. 30, amid protests calling for the ouster of Hosni Mubarak, Egypt’s president.

However, Van Eck had accepted investor cash on Friday, Jan. 28, and was unable to put that money to work.

On Monday, Jan. 31, Van Eck announced the Egypt ETF was halting the creation of new shares, although it would honor redemptions. Shares of the ETF continued to trade on the secondary market while Egypt’s stock market remained closed.

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