So as I understand it ETF’s are electronically traded funds that track some sort of asset or a group of assets. For example, SPY tracks the S&P 500, so if you buy into SPY then your investment will be perfectly correlated with the index. What I am confused about is what you are actually buying and how that buying pressure affects the ETF. Let’s say a bunch of people buy SPY, wouldn’t this drive the price of the ETF up and if this is the case then how could it track the index perfectly? Probably a stupid question, but it doesn’t make a lot of sense to me.
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