What cash amount is needed for creating and redeeming trackers?
The creation and redemption processes involve shares and a cash amount. The cash amount may be positive or negative, depending on whether the net asset value is higher or lower than the total value of the shares. The factors that affect the size of the payment are: · the dividend distributed to shareholders that has not yet been paid out; · accrued interest on cash in the fund’s capital; · any revenue generated by synthetic constructions. Management and transaction costs are included in the amount of cash to be paid or received. When trackers are created, the market participant has to pay a cash amount when delivering the index constituents to the fund manager to exchange them for trackers. When trackers are redeemed, the fund manager includes a cash payment with the index constituents that are delivered to the market participant in exchange for trackers.
