Can someone explain in layman pleb terms what removing “in kind redemptions from filings” as well as “cash creates only” actually means?
Discussion
That what AI says:
Investing in ETFs without in-kind redemptions can have certain benefits. In-kind redemptions are a fundamental feature of the ETF asset class, allowing ETFs to avoid selling securities to raise cash to meet redemptions, which can prevent capital gains distributions and reduce the ETF's tax burden.
This can lead to tax efficiency, as ETFs typically pass through fewer capital gains to investors due to the in-kind creation/redemption process.
Additionally, in-kind redemptions can help to insulate shareholders of the fund from capital gains arising from the buying and selling of securities.
However, it's important to note that ETFs without in-kind redemptions are not common, as in-kind redemptions are a fundamental feature of the ETF asset class.
Therefore, while there are potential benefits to investing in ETFs without in-kind redemptions, it is unlikely to find such ETFs in the market.
Yeah seems to be for reducing CGT events. Cash only seems to be a closed fiat system step to reduce laundering by middlemen brokers.
As I understood with in cash, if a large shareholder want to sell a lot of shares in the ETF, such that he cannot see the share on the open market without crushing the price, the ETF issuer is forced to exchange the share for USD equivalent. With in kind the isssuer could have the possibility to give you real BTC to the large seller, thus this would give more stability to the ETF price and less impact the BTC price (or with a delay if the seller intend to sell the BTC afterward).
I would think that in kind is better for BTC and it was the prefered option for Blackrock and the others but for some reason the SEC force in cash. However I have limited knowledge in this to fully ubderstand the pro and cons of each option.
