Welcome to ETFs 102.

In ETFs 101, I covered the basics—what exchange-traded funds (ETFs) are, how they differ from traditional mutual funds, their advantages and disadvantages and how I see them fitting into a portfolio.

In today’s “lesson,” I’ll discuss the nitty-gritty of ETF pricing, returns and tax mechanics. Let’s dig in.

Dynamic Returns

The ETF vehicle’s advantages—intraday trading, low minimums, tax friendliness—come at a cost: complexity. And, well, the way ETF prices are reported and how distributions from ETFs are reinvested are more complicated than you’d expect. 

First, let’s take a look at pricing.

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