It is difficult to know the exact percentage of inflows into the ETFs that are tied to the “basis trade”, which is also known as the cash and carry trade. This strategy involves investors going long the underlying asset while simultaneously shorting the futures contract, which typically trades at a premium. The goal of the trade is to capture the premium between the spot and futures price. As the futures contract nears expiration, its price converges with the spot price, closing the arbitrage opportunity and allows the investor to capture the spread.
