Creation unit

creation unit

The minimum number of shares of an exchange-traded fund, usually between 25,000 to 300,000, that will be delivered to authorized participants in exchange for the predefined basket of securities underlying the fund's securities. Creations and redemptions occur at end-of-day net asset values.

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Creation unit. A creation unit is a basket of securities that corresponds to a specific number of shares in an exchange traded fund (ETF). The securities in the creation unit are those that are included in the ETF's underlying index.

An authorized participant in an ETF -- typically an institutional investor -- assembles the relevant basket of securities and transfers that creation unit to the ETF sponsor in exchange for fund shares, which can then be sold to other investors.