Stocks & InvestmentsJun 24, 2023
Googleparker st
How is money outflow different from share price drop?
https://www.bloomberg.com/news/articles/2023-06-21/invesco-qqq-etf-sees-multi-billion-dollar-outflow-right-as-its-shares-fall When one person sells, another buys at the same price. So money outflow is just a natural consequence of share price drop, isn’t it? Why do people always talk about x amount of money outflow, when everyone knows the stock price has dropped? Maybe it’s different for ETFs since ETFs have to rebalance / sell underlying stocks when too many people sell the ETF relative to the stocks they own? 240k L4
Poll
1 Participant
Select only one answer
It's exactly your last paragraph ETFs has a mechanism where certain players can buy up the etf, and then redeem it for the underlying securities from the ETF, all tax free for the fund. The opposite can happen too to create more ETF shares. This keeps ETFs close to their nav (underlying) price