Here my (presumably flawed) assumptions and understanding of stocks and stock valuations:
1. The "worth" of stocks (therefore ETFs) can be estimated based on future earnings (dividends) and/or the underlying companies' future growth
2. Future growth only is worth something, with the assumptions that the company will at some point pay dividends. If you know for a fact that the company will never pay dividends, then its stock should be worthless regardless of growth (the only exception would be in case of liquidation, where you might or might not recover something based on company assets, the value of which will be much less than what you paid for the stock).
3. The real value of stocks is purely based on supply and demand. If more people are selling the stock, its value goes down, if more people are buying, it goes up.
4. The supply and demand of a stock should be generally correlated to its worth (if the stock is perceived to be undervalued, the demand will increase, and vice versa) but there is no mathematical rule stating that it has to be. If tomorrow every shareholder of company X would sell all their shares, the share value of company X would go to 0 regardless of its "worth".
WITH THAT SAID:
1. An accumulating ETF will **never** pay a dividend, and we know this for a fact
2. When the firm managing the accumulating ETF receives dividends from the underlying companies, they reinvest it to buy more stocks. This should increase the "worth" of the ETF (since the same units of ETF now represent more underlying shares). However, the real value of the accumulating ETF is only determined by how many people are buying and selling the accumulating ETF, and there is nothing truly linking it to the underlying assets it represents
CONCLUSION:
Accumulating ETFs have no intrinsic worth, and their value (supply and demand) is only driven by the perception that people can sell the accumulating ETF later to other people for more or less money.
How is this not a Ponzi scheme?
Am I missing some key mechanism?