Creation and Redemption
Creation and redemption is the process by which authorized participants create or redeem ETF shares in large blocks called creation units by exchanging baskets of underlying securities (or cash) with the fund sponsor. This mechanism helps keep the ETF's market price aligned with its net asset value (NAV) and supports liquidity in the ETF market.
Example: An authorized participant creates new ETF shares by delivering a defined basket of underlying securities to the sponsor in exchange for creation units.
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