creation unit

creation unit definition - finance
The number of shares in an exchange traded fund (ETF). An ETF is similar to a mutual fund, but it has the objective of achieving the same return as a particular market index. The size of the creation unit varies by fund and ranges from 25,000 to 600,000 shares. Participants engaging in the creation and redemption process are charged a fee, which varies. One well-known ETF is Spiders, or SPDRs, which invests in all the stocks included in the S&P 500 Composite Stock Price Index.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

Comments
Improve this definition.
Do you have more to add? Share your linguistic knowledge or observation.
/Register to save your comments.