Does anyone here have any experience or know of a way to create a new stock or mutual fund to be traded on the major exchanges? This stock/mutual fund could represent x bitcoins. If this stock/fund existed then people who have etrade, ameritrade, or similar accounts could buy bitcoins. Portfolio managers, hedgefund managers, etc. could pour money into bitcoins.
I think this could be HUGE...
I was thinking about this today too... if you'll forgive me for digging up this older thread.
First of all ETF and mutual funds usually are created to hold publicly traded equities, which are already highly liquid. You have to be a big "market maker" and get approvals from SEC and so on to do it. Shares are bought and sold in large "Creation units" which are then held in the fund for others to trade in smaller quantities when they buy/sell your ticker. I just don't think it would work until the bitcoin market is much larger and more liquid than it is today.
However, you can go public on OTCBB or pink sheets with relatively less effort. It might cost you $50K-100K in legal work, maybe less if you can find an acceptable shell company to buy. At that point you now have an entity that anyone can trade, but rather than trying to actively maintain an exact proportion between your share price and bitcoin, what you could do is publish your holdings on a web site and let the market dictate your share price. Periodically you could do new share issuances to bring in more cash, and then use that cash to acquire more bitcoins. Then on your web site you would simply publish the real-time book value of the entity, and that would be roughly the market cap at which you will trade. Of course people would have to trust that you actually have the holdings that you say you do, but that's the kind of risk you're assuming with any pink sheet entity. As an investor I wouldn't accept that counterparty risk when I could just own the bitcoins myself, but I'll bet there are a lot of people who would.