alt investment

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

alt investment

Postby pradeeppdy » Tue Nov 20, 2012 7:26 am

A feature unique to ETFs is their in-kind creation and redemption of shares,i didn't understand the meaning of in kind creation?

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pankaj
Finance Junkie
Posts: 61
Joined: Fri Aug 03, 2012 11:24 am

Re: alt investment

Postby pankaj » Tue Nov 20, 2012 10:03 am

The authorized participant creates ETF shares by depositing a portfolio of stocks into the applicable fund in exchange for a block of ETF shares. This is known as "in kind" creation because a basket of stocks is exchanged for ETF shares rather than using cash.

Hope this helps!


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