How to Tell If an ETF Is Overvalued (5 min read)
Although it is not foolproof, there are methods to determine whether an ETF is overvalued. Investors can look at the value of the ETF itself or the valuation of its underlying holdings. For the ETF’s valuations, investors can analyze the NAV, market price, and the intraday indicative value. For the valuation of the ETF’s underlying holdings, investors can use metrics similar to stock analysis such as P/E and P/B ratios, and compare it to a comparable benchmark. More details of each valuation method are available in the article.