ETFs & Funds
Funds pool assets and strike a NAV, while ETFs add creation and redemption, the arbitrage mechanism that keeps price and value locked together.
A fund pools money to hold a portfolio; the structure determines how investors get in and out. Open-end mutual funds strike a net asset value once a day and transact at it, while exchange-traded funds list shares that trade continuously on an exchange. ETFs rely on creation and redemption: authorized participants assemble or disassemble baskets of the underlying in exchange for ETF shares, keeping the market price glued to NAV. This mechanism made broad, cheap, intraday market access available to any investor, turned index investing into the default, and seeded an ecosystem from sector funds to levered and synthetic products that the derivatives group prices against.