Creation Unit
 |
Definition of 'Creation Unit'A set of shares or securities that makes up one unit of a fund held by the trust that underlies an exchange-traded fund (ETF). One creation unit is the denomination of underlying assets that can be redeemed for a certain number of ETF shares. |
 |
Investopedia explains 'Creation Unit'Creation units can vary in size; with most containing between 25,000 and 600,000 ETF shares each. The use of creation units in the construction of ETF shares is critical because they allow for the representation of the underlying assets - the ETF shares, which represent a tiny chunk of a creation share - to be traded intraday. The ability to trade ETFs on an exchange gives them a significant advantage over comparable investment vehicles, such as mutual funds. |
Related Definitions
Articles Of Interest
-
A Guide To ETF Liquidation
There are a lot of ETF options, but not all have staying power. Learn what happens when an ETF fails. -
An Inside Look At ETF Construction
If you're an investor who likes to understand how and why your investment products work, this article is for you! -
Introduction To Exchange-Traded Funds
Get into ETFs and enjoy the benefits of a mutual fund with the flexibility of a stock. -
Can you short sell ETFs?
ETFs (an acronym for exchange-traded funds) are treated like stock on exchanges; as such, they are also allowed to be sold short. Short selling is the process of selling shares that you don't ... -
Alternative Energy ETFs Battle For Inflows: PBW vs. TAN
Alternative energy has been a hot button issue for the last 50 year,s and investors have always found a way to play this heated market. In the last decade, there has been the launch of a number ... -
How To Read An Options Table
With more information available and the ability to quickly trade options online, investors are becoming savvier with using options to speculate, hedge and create their own financial strategies ... -
Daily ETF Roundup: XHB Pops On Homebuilder Data, EWG Jumps On Bundesbank Outlook
U.S. equities got off to a relatively strong start as investors turned their attention to the Federal Reserve meeting later this week. In economic news, the New York Fed’s Empire State ... -
Active ETFs: Biggest Winners & Losers YTD
Active ETFs have grown in popularity over the last decade as a great alternative to the traditional assets. With the hands-on approach of a mutual fund but the aggressively cheaper price tag, ... -
Consumer ETFs: 3 Things To Consider
Exchange-traded funds have taken the market by storm, with more than $1.5 trillion in assets under management across more than 3,000 securities. These ETFs provide everyday investors with exposure ... -
ETFdb Weekly Watchlist: EWG, VXX, VIS Hinge On German Sentiment, The Fed And Manufacturing Data
Volatility returned on Wall Street last week, as investors digested a slew of economic news and data. Standard & Poor’s Rating Services raised its outlook for the nation’s credit from negative ...
Free Annual Reports
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=85f26d9a6dc83c43d5585f6e7b44bdba
