Trading Confusion Due to iNAV Calculation Error in Korean ETFs
A recent trading confusion occurred in Korean domestic stock ETFs due to an error in computing their indicative Net Asset Value (iNAV). This error originated from mistakes by Korea Fund Partners, the funds' administrative service provider, involving double-counting of dividends. As a result, investors traded these ETFs at approximately 1% higher than their actual worth, and elevated trading continued for nearly three hours.
A total of 163 ETFs were affected by this issue, with asset management firms currently assessing the extent of the damages. Most of the problematic ETFs resolved their issues by the afternoon, and relevant disclosures have been ongoing. This incident underscores the need for meticulous management by service providers and a more cautious approach towards ETF pricing.
Korea Fund Partners is working on rectifying the situation and discussing investor compensation. This incident highlights fundamental issues of transparency and accuracy in the ETF investment landscape, necessitating preventive measures to avoid future occurrences of similar problems.
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