There are ETFs that follow an index. Let's say the classic S&P 500. We have two different ETFs following the same index. Let's say Vanguard and Schwab. Let's say Vanguard has much higher demand for some reason in a time range of 1 year. Will this 1 year the Vanguard ETF go up much faster than the other one even if they are following the same index?


No, this would create an arbitrage which an authorized participant (AP) would quickly take advantage of. Worth reading up about the creation and redemption mechanism (here is a good place to start) to understand the exact way this happens in ETFs as it's very key to how they work.

  • 1
    Also just realized I missed this on your other ETF question so have just added it to the answer there about spreads and charges for simplicity...
    – Philip
    Nov 14 '17 at 14:08

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.