4min chapter

Money For the Rest of Us cover image

Which is Best - Active or Passive, ETFs or Funds?

Money For the Rest of Us

CHAPTER

The Role of Market Makers in Mutual Funds

Most market makers, they're making a market without having necessarily buy underlying shares in the reference basket. What market makers do? So say one of your listeners at 11 o'clock on Monday morning decide they want to buy 25,000 shares of ETF ABC. In the real world, that's an oversimplification. The market maker would actually sell you short, those shares. And so your listener that buys, buys theirETF, gets the IPO shares, but the market maker is short, those Shares.

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