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by totalZero 1958 days ago
The funds have to trade the constituents. They can't say "here's our new ETF that is equivalent to such and such basket" without trading the basket, because otherwise they're basically short their own ETF. That position taken by the entity managing the fund can be dynamic depending on constituent weighting, dividend treatment, etc -- and (this is important) it may not match exactly with the composition of the ETF.

https://www.bloomberg.com/professional/blog/passive-funds-ef...

https://www.bloomberg.com/news/articles/2021-01-28/gamestop-...

https://www.ssga.com/us/en/institutional/etfs/funds/spdr-sp-...