By definition, an ETF is a fund which is made up of different financial instruments. The ETF is priced according to the performance of the Net Asset Value (NAV) of its constituents. The price of an ETF is determined by the spread, or the commission that brings buyers and sellers together. The NAV of an ETF is an important marker. If the market price of the ETF is higher than the NAV, then the ETF is trading at a premium. If the NAV is higher than the ETF price, the ETF is trading at a discount.