ETF creation and redemption

ETF creation and redemption is how an ETF's price stays near the value of its holdings: large dealers swap baskets of shares for new ETF units, or units for shares, whenever the gap is worth it. The dealers doing it are market makers; a perpetual uses funding for the same job, and a copy with nobody allowed to create or redeem has no anchor at all.

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  • ADR (American Depositary Receipt)An ADR is a receipt a US bank issues for shares of a foreign company it holds abroad, so the stock trades in New York…
  • Inverse ETFAn inverse ETF aims for the opposite of an index's daily move, so it rises when the index falls, and it resets daily…
  • Pre-IPO stocksPre-IPO stocks are shares of private companies before they list, priced in private funding rounds with no public order…
  • Stock split (US)A stock split divides each share into several, so a 10-for-1 split turns one $1,000 share into ten $100 shares at the…
  • Contract rolloverContract rollover is closing an expiring futures month and opening the next to stay exposed. Front at $85.00, next at…
  • Real-world asset (RWA)A real-world asset is a physical or financial thing, gold, oil, a US share, whose price you can hold a claim on and…

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