Hi Mr. Tan,
You recommended investing in the STI exchange traded fund. But, I find the volume to be small. Just 1 or 2 lots a day. How can I accumulate a large volume in this thin market?
REPLY
If you wish to buy a large quantity of ETF, the fund manager (i.e. State Streets) will sell the ETF units to you and create new units by buying the underlying shares from the market.
Similarly, if you wish to sell a large quantity of ETF, the fund manager will buy the ETF units from you and redeem the units by selling the underlying shares to the market.
In actual fact, the fund manager makes the market. They will do it at the fair price of the ETF shares (which should reflect the value of the underlying shares). There is no lack of liquidity.
Subscribe to:
Post Comments (Atom)
:.
0 comments:
Post a Comment