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What is an ETF and how does it work?

An ETF can issue and redeem shares at net asset value to qualified participants in exchange for a basket of securities that correspond with the index that the ETF is designed to track. This issuance of shares is commonly referred to as creation units, which are normally issued in lots of 50,000 shares.

Is an ETF a mutual fund?

However, unlike mutual funds, ETF shares trade like stocks on exchanges, with prices fluctuating throughout the day based on market demand. For example, certain ETFs track the S&P 500 or the Barclays Capital U.S. Aggregate Bond Index, which invests in securities in those indexes. But an ETF isn't a mutual fund.

What is a currency ETF?

Currency ETFs are exchange-traded funds that have exposure to foreign exchange markets, allowing investors to trade currencies much like stocks. They track a single currency or basket of them, offering a way to speculate on currency moves or hedge against currency risk.

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