So I'm still learning about stocks and I was letting my mind wander. I got to thinking about ETFs, and my thoughts crossed into the following:
For lack of a better term, an ETF that is actively managed by one or multiple day Traders. Dividends are paid out monthly with at least 1% yields.
The main thought was: how is this worth anything for the person or people starting it. Answer there is pretty simple, more buying power without risking more of your own money.
Second thought then is how is it of any value to people who buy it. Easy answer is the dividends.
Third thought then would be how does the ETF get more money if the trading goes poorly, and my thoughts there end at issuing more shares. There's the issue of dilution, but if the money from newly issued shares goes directly back to the fund I can't imagine that crashing the value.
Final thought then is would this whole idea still fall in the realm of an ETF, something else, or would it be considered some sort of a scam or otherwise illegal? It feels like if not done exactly right it could absolutely be a Ponzi scheme or something, but I haven't quite gotten my knowledge base expanded that far yet, so here I am.
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