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Strategies & Market Trends : Waiting for the big Kahuna
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To: set who wrote (31343)10/12/1998 10:24:00 PM
From: Moominoid  Read Replies (1) of 94695
 
Do they normally
trade at a discount or is that a meaningful divergence?

Two factors cause them to deviate from the index:

1. The price includes dividends paid out by companies but not yet distributed to holders of SPY or DIA.

2. Supply and demand. In the short-run they are a closed end fund, in the longer run new units are created. If there was a big creation of units that could depress the price I guess?

David
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