ETFs are investment funds that track an index, and are divided into equal units which are traded on the exchange during official trading hours. ETFs enjoy advantages of both mutual funds and stocks at the same time.
Secondary Markets: ETF Units are traded on the Exchange
Primary Markets: ETF Units are created and redeemed versus the Fund Manager
Traded on Exchange (Flexibility) | Yes |
Visibility into Holdings (Transparency) | Daily |
Units Creation and Redemption | Follows the Fund’s Terms and Conditions |
Number of Units | Open-end: Changes at end-of-day based on creations and redemptions |
Pricing | Secondary Markets: Market determined, close to the iNAV Primary Markets: Net Asset Value (NAV) |
Market Maker | Listing requirement |
Liquidity | Secondary Market: Intraday, any trade size, supported by Market Maker Primary Markets: Large minimum transaction size following the Fund’s Terms and Conditions |
Investors | Secondary Markets: All Types Primary Markets: Follows the Fund’s Terms and Conditions |
Article ID: 42
Created: December 1, 2022
Last Updated: December 1, 2022
Author: Dr. Nabil Chaiban
Online URL: https://kb.bankingwords.com/article.php?id=42