Part 2

How do ETFs work?

So firstly, an ETF company will decide to create a new fund with a specified goal. Securities are purchased in the relevant area in line with the specified purpose, and then they are exchanged for blocks of the shares in the new ETF, which are equal in value. This is referred to as an "in-kind transfer." These blocks of shares are called the creation units. The size of these can vary considerably based on volume and demand. These are then sold to market makers and investors on an exchange. The ...

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Beginner
What is an ETF?
6 Lessons
~14 mins in total
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