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Surely at one point someone has to invest into the fund, you can't just buy shares on the secondary market otherwise how do they fund assets? For ETFs, market
by cm2187 3y ago
Surely at one point someone has to invest into the fund, you can't just buy shares on the secondary market otherwise how do they fund assets?
For ETFs, market makers are liaising with the issuer to issue and redeem as the demand fluctuates. But that only works for liquid underlying assets.
- infecto 3y agoI think that is conflating the ETF and the underlying REIT. The REIT has a float that is going to be similar to any other publicly listed company. The market is setting the price and underlying value of the REIT. The ETF which has a basket of those REITS, will include authorized participants that are creating and redeeming shares based on the underlying REITS. Are there any REIT ETFs with basket holdings including non-traded assets? I am not sure but I don't know of any. So the ETF is indeed redeeming/creating based on market supply/demand but its of an underlying public traded REIT.