And, because the Fed is not involved in setting short-term interest rates, it creates no opportunities for arbitrage.

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This trade repeats itself until the ETF price moves close enough to the NAV that arbitrage is no longer profitable.

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If you still think there is some mathematical magic in rebalancing, then ask yourself why no one is creating arbitrage profits out of this phenomenon.

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Merger arbitrage is no way to get rich quick.

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The arbitrage trade would be repeated over and over until the discrepancy between the ETF and its underlying value was so small that there is no profit left from arbitrage.

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The Fed has to lower federal funds close to zero if for no other reason than allowing banks to arbitrage money.

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