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ETF Sticker-shocked? Don't be.

Why ETF prices may not necessarily reflect their true value

The exchange-traded fund (ETF) may seem like a straightforward investment vehicle, but when looking under the hood there can be many complexities, such as discrepancies between price and the value of the underlying holdings. In this audiocast, Mike McManus, Investment Strategist within Bank of America's Global Wealth & Investment Management Division, discusses why these discrepancies occur and where they're likely to arise. 

For more information on this topic, please read the full paper: Are you ETF sticker-shocked? Don't be. Why ETF prices may not necessarily reflect their true value.

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Investing involves risk, including the possible loss of principal.

Exchange Traded Funds (ETF's) are subject to risks similar to those of stocks. Investment returns may fluctuate and are subject to market volatility, so that an investor's shares, when redeemed or sold, may be worth more or less than their original cost. ETF's are sold via a prospectus.

Asset allocation, diversification, dollar cost averaging and rebalancing do not ensure a profit or protect against loss in declining markets.

Past performance is no guarantee of future results.

The views expressed are those of the Chief Investment Office (CIO) only and are subject to change. This information should not be construed as investment advice. It is presented for information purposes only and is not intended to be either a specific offer by any Merrill Lynch or U.S. Trust entity to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.

Global Wealth & Investment Management (GWIM) is a division of Bank of America Corporation. Merrill Lynch Wealth Management, Merrill Edge®, U.S. Trust, and Bank of America Merrill Lynch are affiliated sub-divisions within GWIM. The Chief Investment Office, which provides investment strategies, due diligence, portfolio construction guidance and wealth management solutions for GWIM clients, is part of the Investment Solutions Group (ISG) of GWIM.

This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. All sector and asset allocation recommendations must be considered by each individual investor to determine if the sector is suitable for their own portfolio based upon their own goals, time horizon, and risk tolerances.

Equity securities are subject to stock market fluctuations that occur in response to economic and business developments and have varying degrees of risk. Some of the risks involved with equities include the possibility that the value of the stocks may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the U.S. or abroad.

These risks are magnified for investments made in emerging markets. Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates, and risk related to renting properties, such as rental defaults.


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