The precise circumstances under which mankind first encountered and controlled fire—and then began cooking—are likely to remain obscure. Some archaeologists and anthropologists embrace the idea that the first controlled fire became available when men made sparks by hitting stones together while making tools. For a very concise (if conjectural) history see Dreifus (2009). For more details, see Wrangham (2009), especially pp. 190-194.
Some of the material in the balance of this chapter first appeared in Broms and Gastineau (2006; 2007).
The material described in this and the next few paragraphs is widely known, but not frequently discussed. A recent comprehensive description of mutual fund pricing over the years is available in Swenson(2005), pp. 270-294.
The market makers, or dealers acting on behalf of market makers, even pay a modest creation or redemption fee to cover the fund’s administrative expenses associated with creation and redemption of the ETF shares.
We will see in Chapter 6 that lazy ETF portfolio managers don’t always keep the fund’s cash fully invested.
For a comprehensive discussion of the 2003-2004 scandals and the market structure behind them, see Gastineau (2004).
For more details on ETF tax treatment, including opportunities for capital gains tax deferral, see the extended discussion of this topic in Chapter 4.
Later chapters offer a few examples of ETFs that can be much less tax-efficient.
Interestingly, tax deferral helps encourage ...