What's the difference between an ETF's market price and its net asset value (NAV)?

An ETF's net asset value (NAV) is the true per-share value of everything the fund owns, calculated from the underlying holdings. Its market price is whatever buyers and sellers are trading it for on the exchange at that moment. Usually the two stay very close because professional traders called authorized participants arbitrage away gaps by creating or redeeming shares. But the market price can drift to a small premium (above NAV) or discount (below NAV), especially in volatile markets or for ETFs holding hard-to-trade assets like international or bond securities. Before buying, glance at the premium/discount, which brokers often display, and use limit orders on less-liquid ETFs. For big, popular index ETFs the gap is typically a fraction of a percent and nothing to worry about.