When ETF NAV Gets Struck: London Market Close's Growing Impact

The timing of when ETF Net Asset Value (NAV) is calculated and struck has become an increasingly debated topic within the global financial community. According to Bloomberg Intelligence’s senior ETF analyst Eric Balchunas, the current practice of determining NAV at the London market close—which corresponds to noon U.S. Eastern time—is raising eyebrows among market participants and prompting serious discussions about its practicality and fairness.

The Timing Controversy Around NAV Calculation

The decision to strike NAV at the London close creates a unique situation in global markets. This timing choice is unusual because it essentially locks in NAV values at a specific London moment that translates to midday in the United States. Balchunas highlighted this unconventional arrangement on social media platform X, describing the timing as “crazy,” a characterization that reflects the surprise and skepticism within the industry regarding this operational choice.

NAV striking is a fundamental mechanism in ETF trading—it determines the official daily valuation of the fund’s underlying assets. The timing of this calculation directly affects how investors can execute trades and potentially the pricing efficiency of the ETF relative to its underlying portfolio value. When NAV is struck at London close rather than at a more conventional time like U.S. market close or midnight UTC, it creates operational challenges and information gaps.

Market Implications and Industry Concerns

The implications of this timing arrangement extend beyond mere technical curiosity. For ETF investors and market professionals across different time zones, NAV determination at London close creates asymmetrical information advantages and potential pricing inefficiencies. Traders in Asia-Pacific markets, for instance, face a NAV that was struck in the morning their time, while North American traders await updates that reflect midday conditions.

This timing structure raises questions about market fairness, operational efficiency, and whether current practices adequately serve the global investor base. The underlying concern is whether NAV striking at London close truly represents the most optimal moment for capturing accurate asset valuations across the world’s interconnected financial markets.

Expert Perspectives on Global ETF Operations

The discussion sparked by Balchunas reflects a broader conversation about ETF operational standards and whether existing conventions still make sense in modern global markets. As ETF assets have grown substantially and geographic diversification has increased, questions about timing protocols have become more relevant.

Industry observers are increasingly questioning whether the London close remains the ideal benchmark for NAV determination, especially given the expansion of global trading hours and the need to serve 24-hour market realities. The debate suggests potential future discussions around standardizing NAV striking times or implementing more flexible mechanisms that better accommodate the global nature of modern investing.