How ETFs work

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niveza
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Joined: Wed Feb 22, 2017 3:48 pm

How ETFs work

Post by niveza » Tue Feb 13, 2018 5:45 pm

An ETF is bought and sold just like a stock of the company during the day's session when the exchanges are open. Furthermore, like a stock, an ETF has a ticker symbol and the intraday price data can be easily acquired while the trading session is on.

Unlike a stock, the number of shares outstanding of an ETF can change on a daily basis as the process of formation of new shares and the redemption of existing shares continues. The very ability of an ETF to issue and redeem shares on an continues basis is responsible for keeping the market price of ETFs in sync with their underlying securities (shares, bond, etc).
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