There can be huge differences between the prices of the accumulating and distributing versions of ETFs following the same index.

For instance, as of 17 Jan 2020, the NAV of the accumulating version of the iShares Core MSCI EM IMI UCITS ETF was $31.02 (EIMI / IE00BKM4GZ66, inception date: 2014, net assets: $15,478M) whereas the NAV of the distributing one was $4.83 (EIMU / IE00BD45KH83, inception year: 2018, net assets: $313M), so the is accumulating ETF is 6 times more expensive than the distributing ETF.

On the other hand, SPDR® Dow Jones Global Real Estate UCITS ETF (Dist) NAV was $39.79 (GLRE / IE00B8GF1M35, inception year: 2012, total fund assets: $944M, share class assets: $944M) whereas the NAV of its accumulating version was $20.26 (GLRA / IE00BH4GR342, inception year: 2019, total fund assets: $944M, share class assets: $0.40 M), so the distributing ETF's NAV is twice as expensive as the accumulating ETF's NAV.

The only differences between those ETFs seem to be the assets under management (AUM) and the inception dates. What may explain the huge differences in NAV? What are the consequences for buy-and-hold / long-term strategies? Should the gap decrease in the long run?


Here are the factors influencing the NAV of an ETF:

  1. The initial NAV when the fund was created. If Fund A was created with an initial NAV of $10 and Fund B was created with an initial NAV of $20, and the funds are otherwise identical, then Fund B will continue to have an NAV twice that of Fund A.
  2. Returns on investment. As the assets in a fund yield positive returns, the NAV will increase, and as the assets yield negative returns, the NAV will decrease. In the case of this question, both funds hold the same assets, so this factor won't explain any differences in price.
  3. Dividends and distributions. If a fund pays dividends or otherwise distributes assets to its shareholders, its NAV will decrease.
  4. Splits. In a forward split, the NAV will decrease, and in a reverse split, the NAV will increase.

In the case of two funds that hold identical assets, the differences in NAV must come from factors 1, 3 and 4 here.

What are the consequences for buy-and-hold / long-term strategies?

Nothing. The NAV per share of an ETF is essentially meaningless. It's possible for Fund A to have an NAV of $3 per share, and for Fund B to have an NAV of $300 per share, and for the two funds to be completely identical as far as investors are concerned.

Should the gap decrease in the long run?

Generally speaking, no.

Out of the above 4 factors, factor 3 (dividends and distributions) will cause an accumulating ETF to slowly overtake a distributing ETF over time. However, in one of your two examples, the accumulating ETF already has a greater NAV per share, so factor 3 will cause the gap to widen.

Factor 4 (splits) could cause anything whatsoever to happen to the NAV per share. The fund administrators can do a split whenever they like. Most likely, they will split the fund whenever its NAV per share gets inconveniently large.


The difference between them is more fundamental than just straight NAV and which one is in demand.

An accumulating ETF will take any interest or dividends it receives and put that money straight back into the ETF by buying more shares. A distributing ETF will pay all that money out to its investors.

In the examples you provided, that means that the inception dates really will matter. The 2014 ETF will have had 4 more years of paying those dividends to itself and compounding them automatically as opposed to the two-year-old distributing ETF which will have paid out all that money to investors.

Over time, the difference in NAV between the two should grow larger all else being equal.

The difference between the two for you comes down to which you prefer for your strategy (and possibly how you would prefer to be taxed). The accumulating ETF will effectively push all its gains into capital gains while the distributing will put much of its gains into income with some capital gains on the underlying shares.

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