When an ETF trades above basket value, an authorised participant buys the constituents, delivers them for new ETF shares, and sells those shares, pushing the price down. Trading below basket value drives the reverse.
The mechanism's strength depends on how tradeable the underlying is. For large-cap equity ETFs it holds the price within a basis point or two. For high-yield bonds, emerging market debt or anything trading in a different time zone, gaps of one to several percent can open and persist.
When that happens, the ETF price may be the better estimate of value and the net-asset-value the stale one, since the ETF trades continuously while the underlying bonds may not have traded at all. See authorized-participant and creation-unit.
Related: authorized-participant, creation-unit, net-asset-value, etf, closed-end-fund-discount, liquidity