In the long run, the price of index fund is determined by its intrinsic value. When the bound constituent stocks perform well and the constituent stocks continue to increase in value, it will increase the net value of index funds and drive the price of index funds to rise. When the performance of constituent stocks declines and the value continues to depreciate, the net value of index funds will also decline, which will eventually drive the price of index funds to fall.

In the short term, the price of index funds is affected by the relationship between supply and demand. As a secondary market trading product similar to stocks, when investors are generally optimistic about index ETF, there will be a situation that the number of buyers is greater than the number of sellers. At this time, demand is greater than supply, resulting in insufficient supply and rising prices. When investors are not optimistic about a fund and the number of sellers is greater than the number of buyers, the price of index funds will fall for a short time.