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Creation and Redemption: When investors buy shares, ETF providers purchase underlying assets accordingly. Conversely, when shares are sold back, the ETF can deliver either cash or actual assets to the investor. Large investors, known as authorized participants, facilitate this process by creating or redeeming large blocks of shares, keeping the ETF’s price close to its net asset value (NAV).
Intraday Pricing: Unlike mutual funds, ETFs are priced in real-time, allowing investors to buy or sell at current market prices. This provides flexibility and accuracy, especially during volatile markets.