The funds in question are YCL/YCS. I was looking at the price fluctuations in these funds and noticed they are not priced accurately on an intraday basis. There is decent enough liquidity in these products and the options on them are marked accurately. That is, the option prices reflect the middle ground of the bid/ask spread.
Why is it that the underlying shares have such large deviations? Are the fund managers not under any obligation to mark these shares accurately until the end of the day? Is there something I glossed over in the prospectuses? It seems extremely shady from a liquidity perspective that the options on these funds are priced accurately but the shares themselves are not priced on the bid-ask spread.
For example, look at FXY, a similar fund (although not leveraged). Its shares are consistently priced on the bid-ask spread and the deviation is rarely >.2% of NAV.
Is this a product of market microstructure with respect to leveraged ETFs?