Sentences with phrase «underlying basket of assets»
The NAV will indicate the value of the ETF based on the value of its underlying basket of assets.
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If the underlying asset is a stock index, settlement is made in cash due to the difficulty in delivering a market basket of stocks.
When creation takes place, an AP assembles the required portfolio of underlying assets and turns that basket over to the fund in exchange for newly created ETF shares.
Since both the ETF and the basket of underlying assets are tradeable throughout the day, traders take advantage of momentary arbitrage opportunities, which keeps the ETF price close to its fair value.