Ever wonder what allows ETFs to be liquid? The answer is “creation and redemption,” the process that lets ETFs trade even when volume is low. Using simple illustrations and a metaphor about flowers, this seven-minute animation will change the way you look at ETFs.

Hat tip Themis Trading

Category: ETFs, Video

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2 Responses to “The Story of ETF Creation and Redemption”

  1. bjorn says:

    I’m surprised that there are no comments on this post.
    With the limited supply of physical gold out there would that mean that owning the GLD etf is like owning one of those fancy mortgage securities that Citibank “created”?
    Could someone please explain?

  2. V says:

    Looks like leverage to me?