Trump Applauds Biden's Blunder; Fatal Misstep! - April 11 😯

Surprising blunder from Biden catches Trump's attention [etf-main]     Trump is astounded by Biden's latest mistake, one that could have serious consequences for many. Chances are, you or someone you know might already be affected. Without action, the list of victims is set to grow, possibly including you. [Click here to uncover Biden's misstep]( and learn how to safeguard yourself against its impacts. Don't wait until it's too late. Anexchange-tradedfundETFisatypeofinvestmentfundthatisalsoanexchange-tradedproductieitistradedonstockexchanges123ETFsownfinancialassetssuchasstocksbondscurrenciesdebtsfuturescontractsand/orcommoditiessuchasgoldbarsThelistofassetsthateachETFownsaswellastheirweightingsispostedonthewebsiteoftheissuerdailyorquarterlyinthecaseofactivenon-transparentETFsManyETFsprovidesomelevelofdiversificationcomparedtoowninganindividualstock AnETFdividesownershipofitselfintosharesthatareheldbyshareholdersDependingonthecountrythelegalstructureofanETFcanbeacorporationtrustopen-endmanagementinvestmentcompanyorunitinvestmenttrust45ShareholdersindirectlyowntheassetsofthefundandareentitledtoashareoftheprofitssuchasinterestordividendsandwouldbeentitledtoanyresidualvalueifthefundundergoesliquidationTheyalsoreceiveannualreportsAnETFgenerallyoperateswithanarbitragemechanismdesignedtokeepittradingclosetoitsnetassetvaluealthoughdeviationscanoccur6 ThelargestETFswhichpassivelytrackstockmarketindiceshaveannualexpenseratiosaslowas003oftheamountinvestedalthoughspecialtyETFscanhaveannualfeesof1ormoreoftheamountinvestedThesefeesarepaidtotheETFissueroutofdividendsreceivedfromtheunderlyingholdingsorfromthesaleofassets7 IntheUnitedStatesthereis54trillioninvestedinequityETFsand14trillioninvestedinfixed-incomeETFsInEuropethereis10trillioninvestedinequityETFsand04trillioninvestedinfixed-incomeETFsInAsiathereis09trillioninvestedinequityETFsand01trillioninvestedinfixed-incomeETFsInthefirstquarterof2023tradinginETFsaccountedfor32ofthetotaldollarvolumeofstockmarkettradingintheUS11oftradingvolumeinEuropeand13oftradingvolumeinAsia8 IntheUSthelargestETFissuersareBlackRockiShareswitha34marketshareVanguardwitha29marketshareStateStreetGlobalAdvisorswitha14marketshareInvescowitha5marketshareandCharlesSchwabwitha4marketshare9 ETFsareregulatedbygovernmentalbodiessuchastheSECandtheCFTCintheUnitedStatesandaresubjecttosecuritieslawssuchastheInvestmentCompanyActof1940andtheSecuritiesExchangeActof1934intheUnitedStates Closed-endfundsarenotconsideredtobeETFseventhoughtheyarefundsandaretradedonanexchangetheydonotchangethenumberofsharestheyhaveissuedunlikeanETFExchange-tradednotesaredebtinstrumentsthatarenotexchange-tradedfunds ETFsvsmutualfunds ETFsaresimilarinmanywaystomutualfundsexceptthatETFsareboughtandsoldfromotherownersthroughoutthedayonstockexchangeswhereasmutualfundsareboughtandsoldfromtheissuerbasedontheirpriceatdaysendETFsarealsomoretransparentsincetheirholdingsaregenerallypublishedonlinedailyandintheUnitedStatesaremoretaxefficientthanmutualfunds101112UnlikemutualfundsETFstradeonastockexchangecanbesoldshortcanbepurchasedusingfundsborrowedfromastockbrokermarginandcanbepurchasedandsoldusinglimitorderswiththebuyerorsellerawareofthepricepershareinadvance1314 Costsandfees BothETFsandmutualfundschargeannualexpenseratiosthatrangefrom003oftheinvestmentvaluetoupwardsof1oftheinvestmentvalueMutualfundsgenerallyhavehigherannualfeessincetheyhavehighermarketingdistributionandaccountingexpenses12b-1fees15ETFsarealsogenerallycheapertooperatesinceunlikemutualfundstheydonothavetobuyandsellsecuritiesandmaintaincashreservestoaccommodateshareholderpurchasesandredemptions16171819 StockbrokersmaychargedifferentcommissionsifanyforthepurchaseandsaleofETFsandmutualfundsInadditionsalesofETFsintheUnitedStatesaresubjecttotransactionfeesthatthenationalsecuritiesexchangesmustpaytotheSECundersection31oftheSecuritiesExchangeActof1934whichasofFebruary2023is8per1millionintransactionproceeds20Manymutualfundscanbeboughtcommission-freefromtheissueralthoughsomechargefront-endorback-endloadswhileETFsdonothaveloadsatall21 Taxation IntheUnitedStatesETFscanbemoreattractivetax-wisethanmutualfundsfortransactionsmadeintaxableaccountsHowevertherearenotaxbenefitstoETFscomparedtomutualfundsintheUnitedKingdomandGermany222324 IntheUSwheneveramutualfundrealizesacapitalgainthatisnotbalancedbyarealizedlossiewhenthefundsellsappreciatedsharestomeetinvestorredemptionsitsshareholderswhoholdthefundintaxableaccountsmustpaycapitalgainstaxesontheirshareofthegain2526HoweverETFinvestorsgenerallyonlyrealizecapitalgainswhentheyselltheirownsharesforagain27 ETFsofferedbyVanguardareactuallyadifferentshareclassofitsmutualfundsanddonotstandontheirownhowevertheygenerallydonothaveanyadversetaxissues28293031 Trading ETFscanbeboughtandsoldatcurrentmarketpricesatanytimeduringthetradingdayunlikemutualfundswhichcanonlybetradedattheendofthetradingdayAlsounlikemutualfundsinvestorscanexecutethesametypesoftradesthattheycanwithastocksuchaslimitorderswhichallowinvestorstospecifythepricepointsatwhichtheyarewillingtotradestop-lossordersmarginbuyinghedgingstrategiesandthereisnominimuminvestmentrequirementETFscanbetradedfrequentlytohedgeriskorimplementmarkettiminginvestmentstrategieswhereasmanymutualfundshaverestrictionsonfrequenttrading432 OptionsincludingputoptionsandcalloptionscanbewrittenorpurchasedonmostETFs–whichisnotpossiblewithmutualfundsallowinginvestorstoimplementstrategiessuchascoveredcallsonETFsTherearealsoseveralETFsthatimplementcoveredcallstrategieswithinthefunds333435 ManymutualfundsmustbeheldinanaccountattheissuingfirmwhileETFscanbetradedviaanystockbrokerSomestockbrokersdonotallowforautomaticrecurringinvestmentsortradingfractionalsharesofETFswhiletheseareallowedbyallmutualfundissuers10 ThemostpopularETFssuchasthosetrackingtheSP500tradetensofmillionsofsharesperdayandhavestrongmarketliquiditywhiletherearemanyETFsthatdonottradeveryoftenandthusmightbedifficulttosellcomparedtomoreliquidETFsThemostactiveETFsareveryliquidwithhighregulartradingvolumeandtightbid-askspreadsthegapbetweenbuyerandsellerspricesandthepricethusfluctuatesthroughoutthedayThisisincontrastwithmutualfundswhereallpurchasesorsalesonagivendayareexecutedatthesamepriceattheendofthetradingday Transparency Issuersarerequiredbyregulatorstopublishthecompositionoftheirportfoliosontheirwebsitesdailyorquarterlyinthecaseofactivenon-transparentETFs363738 ETFsarepricedcontinuouslythroughoutthetradingdayandthereforehavepricetransparency39 CategoriesofETFs IndexETFs IndexETFs-MostETFsareindexfundsthatistheytracktheperformanceofanindexgenerallybyholdingthesamesecuritiesinthesameproportionsasacertainstockmarketindexbondmarketindexorothereconomicindexExamplesoflargeIndexETFsincludetheVanguardTotalStockMarketETFNYSEArcaVTIwhichtrackstheCRSPUSTotalMarketIndexETFsthattracktheSP500whichareissuedbyTheVanguardGroupNYSEArcaVOOiSharesNYSEArcaIVVandStateStreetCorporationNYSEArcaSPYETFsthattracktheNASDAQ-100indexNasdaqQQQandtheiSharesRussell2000ETFNYSEArcaIWMwhichtrackstheRussell2000IndexentirelycomposedofcompanieswithsmallmarketcapitalizationsOtherfundstrackindicesofacertaincountryorincludeonlycompaniesthatarenotbasedintheUnitedStatesforexampletheVanguardTotalInternationalStockIndexETFNYSEArcaVXUStrackstheMSCIAllCountryWorldexUSAInvestableMarketIndextheiSharesMSCIEAFEIndexETFNYSEArcaEFAtrackstheMSCIEAFEIndexandtheiSharesMSCIEmergingMarketsETFNYSEArcaEEMtrackstheMSCIEmergingMarketsindexSomeETFstrackaspecifictypeofcompanysuchastheiSharesRussell1000GrowthETFNYSEArcaIWFwhichtracksthegrowthstocksintheRussell1000IndexStateStreetCorporationhasissuedETFsthattrackthecomponentsoftheSP500ineachindustryforexampletheTechnologySelectSectorSPDRFundNYSEArcaXLKtracksthecomponentsoftheSP500thatareinthetechnologyindustryandTheFinancialSelectSectorSPDRFundwhichtracksthecomponentsoftheSP500thatareinthefinancialindustryTheiSharesSelectDividendETFreplicatesanindexofhighdividendpayingstocks40OtherindexesonwhichETFsarebasedfocusonspecificnicheareassuchassustainableenergyorenvironmentalsocialandcorporategovernance41MostindexETFsinvest100oftheirassetsproportionatelyinthesecuritiesunderlyinganindexamannerofinvestingcalledreplicationSomeindexETFssuchastheVanguardTotalStockMarketIndexFundwhichtrackstheperformanceofthousandsofunderlyingsecuritiesuserepresentativesamplinginvesting80to95oftheirassetsinthesecuritiesofanunderlyingindexandinvestingtheremaining5to20oftheirassetsinotherholdingssuchasfuturesoptionandswapcontractsandsecuritiesnotintheunderlyingindexthatthefundsadviserbelieveswillhelptheETFtoachieveitsinvestmentobjective42434445 FactorETFsareindexfundsthatuseenhancedindexingwhichcombinesactivemanagementwithpassivemanagementinanattempttobeatthereturnsofanindexFactorETFstendtohaveslightlyhigherexpenseratiosandvolatilitythanstrictlypassiveindexETFs464748 SyntheticETFswhicharecommoninEuropebutrareintheUnitedStatesareatypeofindexETFthatdoesnotownsecuritiesbuttracksindexesusingderivativesandswapsTheyhaveraisedconcernduetolackoftransparencyinproductsandincreasingcomplexityconflictsofinterestandlackofregulatorycompliance495051AsyntheticETFhascounterpartyriskbecausethecounterpartyiscontractuallyobligatedtomatchthereturnontheindexThedealisarrangedwithcollateralpostedbytheswapcounterpartywhicharguablycouldbeofdubiousqualityThesetypesofset-upsarenotallowedundertheEuropeanguidelinesUndertakingsforCollectiveInvestmentinTransferableSecuritiesDirective2009UCITS5253CounterpartyriskisalsopresentwheretheETFengagesinsecuritieslendingortotalreturnswaps54Thedifferencebetweentheperformanceofanindexfundandtheindexitselfiscalledthetrackingerrorthisdifferenceisusuallynegativeexceptduringflashcrashesandotherperiodsofextrememarketturbulenceforindexfundsthatdonotusefullreplicationandforindicesthatconsistofilliquidassetssuchashigh-yielddebt555645758 ActivelymanagedETFs ActivelymanagedETFsincludeactivemanagementwherebythemanagerexecutesaspecifictradingstrategyinsteadofreplicatingtheperformanceofastockmarketindexThesecuritiesheldbysuchfundsarepostedontheirwebsitesdailyorquarterlyinthecasesofactivenon-transparentETFsTheETFsmaythenbeatriskfrompeoplewhomightengageinfrontrunningsincetheportfolioreportscanrevealthemanagerstradingstrategySomeactivelymanagedequityETFsaddressthisproblembytradingonlyweeklyormonthly59ThelargestactivelymanagedETFsaretheJPMorganEquityPremiumIncomeETFNYSEJEPIwhichcharges035inannualfeesJPMorganUltra-ShortIncomeETFNYSEJPSTwhichcharges018inannualfeesandthePimcoEnhancedShortDurationETFNYSEMINTwhichcharges036inannualfees60 ThematicETFs ThematicETFsareETFsincludingbothIndexETFsandactivelymanagedETFsthatfocusonathemesuchasdisruptivetechnologiesclimatechangeshiftingconsumerbehaviorscloudcomputingroboticselectricvehiclesthegigeconomye-commerceorcleanenergy6162 BondETFs BondETFsareexchange-tradedfundsthatinvestinbonds63BondETFsgenerallyhavemuchmoremarketliquiditythanindividualbonds64 CommodityETFs CommodityETFsinvestincommoditiessuchaspreciousmetalsagriculturalproductsorhydrocarbonssuchaspetroleumandaresubjecttodifferentregulationsthanETFsthatownsecurities6566CommodityETFsaregenerallystructuredasexchange-tradedgrantortrustswhichgivesadirectinterestinafixedportfolioSPDRGoldSharesagoldexchange-tradedfundisagrantortrustandeachsharerepresentsownershipofone-tenthofanounceofgold6768MostcommodityETFsownthephysicalcommoditySPDRGoldSharesNYSEArcaGLDownsover40millionouncesofgoldintrust69iSharesSilverTrustNYSEArcaSLVowns18000tonsofsilver70AberdeenStandardPhysicalPalladiumSharesNYSEArcaPALLownsalmost200000ouncesofpalladium71andAberdeenStandardPhysicalPlatinumSharesETFNYSEArcaPPLTownsover11millionouncesofplatinum72HowevermanyETFssuchastheUnitedStatesOilFundbyUnitedStatesCommodityFundsNYSEArcaUSOonlyownfuturescontracts73whichmayproducequitedifferentresultsfromowningthecommodityInthesecasesthefundssimplyrollthedeliverymonthofthecontractsforwardfrommonthtomonthThisdoesgiveexposuretothecommoditybutsubjectstheinvestortorisksinvolvedindifferentpricesalongthetermstructuresuchasahighcosttoroll7475Theycanalsobeindexfundstrackingcommodityindices CurrencyETFs CurrencyETFsenableinvestorstoinvestinorshortanymajorcurrencyorabasketofcurrenciesTheyareissuedbyInvescoandDeutscheBankamongothersInvestorscanprofitfromtheforeignexchangespotchangewhilereceivinglocalinstitutionalinterestratesandacollateralyield76 LeveragedETFs SeealsoLeveragefinance LeveragedETFsLETFsandInverseETFsuseinvestmentsinderivativestoseekadailyreturnthatcorrespondstoamultipleofortheinverseoppositeofthedailyperformanceofanindex77ForexampleDirexionoffersleveragedETFsandinverseexchange-tradedfundsthatattempttoproduce3xthedailyresultofeitherinvestinginNYSEArcaSPXLorshortingNYSEArcaSPXStheSP5007879808182Toachievetheseresultstheissuersusevariousfinancialengineeringtechniquesincludingequityswapsderivativesfuturescontractsandrebalancingandre-indexing83Therebalancingandre-indexingofleveragedETFsmayhaveconsiderablecostswhenmarketsarevolatileLeveragedETFseffectivelyincreaseexposureaheadofalosingsessionanddecreaseexposureaheadofawinningsession8384ThisiscalledvolatilitydragorvolatilitytaxTherebalancingproblemisthatthefundmanagerincurstradinglossesbecauseheneedstobuywhentheindexgoesupandsellwhentheindexgoesdowninordertomaintainafixedleverageratio8586878889Leveragepossessesadualnatureasithasthepotentialtoresultinsubstantialprofitsyetitalsocarriestheriskofsubstantiallosses90 CryptocurrencyETFs CryptocurrencyETFsinvestincryptocurrenciessuchasBitcoinEthereumorabasketofdifferentcryptocurrenciesTherearetwotypesofcryptoETFsSpotcryptoETFsinvestdirectlyincryptocurrenciestrackingtheirreal-timepricesandtheirsharepriceswillfluctuatewiththepricesofthecryptocurrenciestheyholdOntheotherhandfuture-basedcryptoETFsrefertoequitiesthatdonotinvestdirectlyincryptocurrenciesbutratherincryptofuturescontractsThesecontractsareagreementstobuyorsellcryptocurrenciesatapredeterminedpriceinthefutureAsaresultthesharepricesandpricefluctuatingtrendsoffundsinthesetwotypescouldbedifferenteventhoughtheyholdidenticalcryptocurrenciesandamounts9192 Arbitragemechanism ETFsharesarecreatedandredeemedwhenlargebroker-dealerscalledauthorizedparticipantsAPactasmarketmakersandpurchaseandredeemETFsharesdirectlyfromtheETFissuerinlargeblocksgenerally50000sharescalledcreationunitsPurchasesandredemptionsofthecreationunitsaregenerallyinkindwiththeAPcontributingorreceivingsecuritiesofthesametypeandproportionheldbytheETFthelistsofETFholdingsarepublishedonline66 TheabilitytopurchaseandredeemcreationunitsgivesETFsanarbitragemechanismintendedtominimizethepotentialdeviationbetweenthemarketpriceandthenetassetvalueofETFsharesAPsprovidemarketliquidityfortheETFsharesandhelpensurethattheirintradaymarketpriceapproximatesthenetassetvalueoftheunderlyingassets66OtherinvestorssuchasindividualsusingaretailbrokertradeETFsharesonthesecondarymarket IfthereisstronginvestordemandforanETFitssharepricewilltemporarilyriseaboveitsnetassetvaluepersharegivingarbitrageursanincentivetopurchaseadditionalcreationunitsfromtheETFissuerandsellthecomponentETFsharesintheopenmarketTheadditionalsupplyofETFsharesreducesthemarketpricepersharegenerallyeliminatingthepremiumovernetassetvalueAsimilarprocessapplieswhenthereisweakdemandforanETFitssharestradeatadiscountfromtheirnetassetvalue WhennewsharesofanETFarecreatedduetoincreaseddemandthisisreferredtoasETFinflowsWhenETFsharesareconvertedintothecomponentsecuritiesthisisreferredtoasETFoutflows93 ETFsaredependentontheefficacyofthearbitragemechanisminorderfortheirsharepricetotracknetassetvalue History ETFshadtheirgenesisin1989withIndexParticipationSharesIPSanSP500proxythattradedontheAmericanStockExchangeandthePhiladelphiaStockExchangeThisproductwasshort-livedafteralawsuitbytheChicagoMercantileExchangewassuccessfulinstoppingsalesintheUnitedStates949596TheargumentagainsttheIPSapproachwasthatitresembledafuturescontractbecausetheinvestmentsheldanindexratherthanholdingtheactualunderlyingstocks97 In1990asimilarproductTorontoIndexParticipationShareswhichtrackedtheTSE35andlatertheTSE100indicesstartedtradingontheTorontoStockExchangeTSEin1990ThepopularityoftheseproductsledtheAmericanStockExchangetotrytodevelopsomethingthatwouldsatisfyregulationsbytheUSSecuritiesandExchangeCommission98 NathanMostandStevenBloomunderthedirectionofIversRileyandwiththeassistanceofKathleenMoriarty99designedanddevelopedStandardPoorsDepositaryReceiptsNYSEArcaSPYwhichwereintroducedinJanuary1993100101102KnownasSPDRsorSpidersthefundbecamethelargestETFintheworldInMay1995StateStreetGlobalAdvisorsintroducedtheSP400MidCapSPDRsNYSEArcaMDY ItisafrequenttopicinthefinancialpressthatETFshaveaquickgrowthThesepopularfundswithassetsmorethandoublingeachyearsince1995asof2001havebeenwarmlyembracedbymostadvocatesoflow–costindexfundsVanguardistheleadingadvocateofindexfunds103 BarclaysinconjunctionwithMSCIandFundsDistributorIncenteredthemarketin1996withWorldEquityBenchmarkSharesWEBSwhichbecameiSharesMSCIIndexFundSharesWEBSoriginallytracked17MSCIcountryindicesmanagedbythefundsindexproviderMorganStanleyWEBSwereparticularlyinnovativebecausetheygavecasualinvestorseasyaccesstoforeignmarketsWhileSPDRswereorganizedasunitinvestmenttrustsWEBSweresetupasamutualfundthefirstoftheirkind104105 In1998StateStreetGlobalAdvisorsintroducedSectorSpidersseparateETFsforeachofthesectorsoftheSP500106Alsoin1998theDowDiamondsNYSEArcaDIAwereintroducedtrackingtheDowJonesIndustrialAverageIn1999theinfluentialcubeswaslaunchedwiththegoalofreplicatethepricemovementoftheNASDAQ-100–originallyQQQQbutlaterNasdaqQQQ TheiShareslinewaslaunchedinearly2000By2005ithada44marketshareofETFassetsundermanagement107BarclaysGlobalInvestorswassoldtoBlackRockin2009 In2001TheVanguardGroupenteredthemarketbylaunchingtheVanguardTotalStockMarketETFNYSEArcaVTIwhichownseverypubliclytradedstockintheUnitedStates108SomeofVanguardsETFsareashareclassofanexistingmutualfund iSharesissuedthefirstbondfundsinJuly2002iSharesIBoxxInvestGradeCorpBondFundNYSEArcaLQDwhichownscorporatebondsandaTIPSfund109In2007iSharesintroducedanETFthatownshigh-yielddebtandanETFthatownsmunicipalbondsandStateStreetGlobalAdvisorsandTheVanguardGroupalsoissuedbondETFs InDecember2005RydexnowInvescolaunchedthefirstcurrencyETFtheEuroCurrencyTrustNYSEArcaFXEwhichtrackedthevalueoftheEuro110111In2007DeutscheBanksdbx-trackerslaunchedtheEONIATotalReturnIndexETFinFrankfurttrackingtheEuroIn2008itlaunchedtheSterlingMoneyMarketETFLSEXGBPandUSDollarMoneyMarketETFLSEXUSDinLondonInNovember2009ETFSecuritieslaunchedtheworldslargestFXplatformtrackingtheMSFXSMIndexcovering18longorshortUSDETCvssingleG10currencies112 ThefirstleveragedETFwasissuedbyProSharesin200677 In2008theSECauthorizedthecreationofETFsthatuseactivemanagementstrategies66BearStearnslaunchedthefirstactivelymanagedETFtheCurrentYieldETFNYSEArcaYYYwhichbegantradingontheAmericanStockExchangeonMarch252008113114115 InDecember2014assetsundermanagementbyUSETFsreached2trillion116ByNovember2019assetsundermanagementbyUSETFsreached4trillion117118119AssetsundermanagementbyUSETFsgrewto55trillionbyJanuary2021120 InAugust2023athree-judgeUScourtpanelfortheDistrictofColumbiaCourtofAppealsinWashingtonoverruledanSECdecisiondenyingGrayscaleInvestmentspermissiontolaunchabitcoin-focusedETFThecourtsdecisionsetsthepathforafirstbitcoinexchange-tradedfundintheUS121122 InOctober2023ProSharesVanEckandBitwiseAssetManagementlaunchedthefirstETFstiedtothevalueofEthereum123 AlsoregardingspotcryptocurrencyETFsinJune2023theassetmanagementcompanyBlackRockfiledanapplicationwiththeUSSecuritiesandExchangeCommissionSECtolaunchthefirstspotBitcoinETFwithCoinbaseasacryptocustodianInJanuary2024theSECapprovedthecreationandtradingof11spotbitcoinETFs124125 InNovember2023BlackRockandFidelityfiledapplicationswiththeSECtolaunchthefirstspotEthereumETFs126 HistoryofGoldETFs Thefirstgoldexchange-tradedproductwasCentralFundofCanadaaclosed-endfundfoundedin1961Itamendeditsarticlesofincorporationin1983toprovideinvestorswithaproductforownershipofgoldandsilverbullionIthasbeenlistedontheTorontoStockExchangesince1966andtheAmericanStockExchangesince1986127 TheideaofagoldETFwasfirstconceptualizedbyBenchmarkAssetManagementCompanyPrivateLtdinIndiawhichfiledaproposalwiththeSecuritiesandExchangeBoardofIndiainMay2002InMarch2007afterdelaysinobtainingregulatoryapproval128Thefirstgoldexchange-tradedfundwasGoldBullionSecuritieslaunchedontheASXin2003andthefirstsilverexchange-tradedfundwasiSharesSilverTrustlaunchedontheNYSEin2006SPDRGoldSharesacommodityETFisinthetop10largestETFsbyassetsundermanagement129 Effectsonpricestability PurchasesandsalesofcommoditiesbyETFscansignificantlyaffectthepriceofsuchcommodities130131 PertheInternationalMonetaryFundsomemarketparticipantsbelievethegrowingpopularityofexchange-tradedfundsETFsmayhavecontributedtoequitypriceappreciationinsomeemergingeconomiesandwarnthatleverageembeddedinETFscouldposefinancialstabilityrisksifequitypricesweretodeclineforaprotractedperiod50 ETFscanbeandhavebeenusedtomanipulatemarketpricessuchasinconjunctionwithshortsellingthatcontributedtotheUnitedStatesbearmarketof2007–2009132 NewregulationstoforceETFstobeabletomanagesystemicstresseswereputinplacefollowingthe2010flashcrashwhenpricesofETFsandotherstocksandoptionsbecamevolatilewithtradingmarketsspikingandbidsfallingaslowasapennyashare133inwhattheCommodityFuturesTradingCommissionCFTCinvestigationdescribedasoneofthemostturbulentperiodsinthehistoryoffinancialmarkets134135 TheseregulationsprovedinadequatetoprotectinvestorsintheAugust242015flashcrash133whenthepriceofmanyETFsappearedtocomeunhingedfromtheirunderlyingvalueETFswereconsequentlyputunderevengreaterscrutinybyregulatorsandinvestors133AnalystsatMorningstarIncclaimedinDecember2015thatETFsareadigital-agetechnologygovernedbyDepression-eralegislation133 PerceptionandadoptionofETFsintheEuropeanmarket ThefirstEuropeanETFcameonthemarketin2000andtheEuropeanETFmarkethasseentremendousgrowthsinceAttheendofMarch2019theassetundermanagementintheEuropeanindustrystoodat€760bncomparedwithanamountof€100bnattheendof2008136ThemarketshareofETFshasincreasedsignificantlyinrecentyearsAttheendofMarch2019ETFsaccountedfor86oftotalAUMininvestmentfundsinEuropeupfrom55fiveyearsearlier136 TheuseofETFshasalsoevolvedovertimeasshownbyregularobservationsofinvestmentprofessionals’practicesinEurope137EDHECsurveysshowanincreasingpropagationofETFadoptionovertheyearsespeciallyfortraditionalassetclassesWhileETFsarenowusedacrossawidespectrumofassetclassesin2019themainuseiscurrentlyintheareaofequitiesandsectorsfor9145in2006138and83ofthesurveyrespondentsrespectivelyThisislikelytobelinkedtothepopularityofindexingintheseassetclassesaswellastothefactthatequityindicesandsectorindicesarebasedonhighlyliquidinstrumentswhichmakesitstraightforwardtocreateETFsonsuchunderlyingsecuritiesTheotherassetclassesforwhichalargeshareofinvestorsdeclareusingETFsarecommoditiesandcorporatebonds68forthembothtobecomparedwith6and15in2006respectivelysmartbeta-factorinvestingandgovernmentbonds66forthembothtobecomparedwith13forgovernmentbondsin2006InvestorshaveahighrateofsatisfactionwithETFsespeciallyfortraditionalassetclassesIn2019weobserved95satisfactionforbothequitiesandgovernmentbondassets TheroleofETFsintheassetallocationprocess OvertheyearsEDHECsurveyresultshaveconsistentlyindicatedthatETFsareusedaspartofatrulypassiveinvestmentapproachmainlyforlong-termbuy-and-holdinvestmentratherthantacticalallocationHoweveroverthepastthreeyearsthetwoapproacheshavegraduallybecomemorebalancedandin2019EuropeaninvestmentprofessionalsdeclaredthattheiruseofETFsfortacticalallocationisactuallygreaterthanforlong-termpositions53and51respectively ETFswhichoriginallyreplicatedbroadmarketindicesarenowavailableinawidevarietyofassetclassesandamultitudeofmarketsub-segmentssectorsstylesetcIfgainingbroadmarketexposureremainsthemainfocusofETFsfor73ofusersin201952ofrespondentswilluseETFstoobtainspecificsub-segmentexposureThediversityofETFsincreasesthepossibilitiesofusingETFsfortacticalallocationInvestorscaneasilyincreaseordecreasetheirportfolioexposuretoaspecificstylesectororfactoratalowercostwithETFsThemorevolatilethemarketsarethemoreinterestingitistouselow-costinstrumentsfortacticalallocationespeciallysincecostisamajorcriterionforselectinganETFproviderfor88ofrespondents ExpectationsforETFfuturedevelopmentsinEurope DespitethehighcurrentadoptionrateofETFsandthealreadyhighmaturityofthismarketahighpercentageofinvestors46stillplantoincreasetheiruseofETFsinthefutureaccordingtotheEDHEC2019surveyresponsesInvestorsareplanningtoincreasetheirETFallocationtoreplaceactivemanagers71ofrespondentsin2019buttheyarealsoseekingtoreplaceotherpassiveinvestingproductsthroughETFs42ofrespondentsin2019LoweringcostsisthemainmotivationforincreasingtheuseofETFsfor74ofinvestorsInvestorsareespeciallydemandingfurtherdevelopmentsofETFproductsintheareasofethicalsociallyresponsibleinvestingandsmartbetaequityclarificationneededandfactorindicesclarificationneededIn2018ESGETFsenjoyedgrowthof50reaching€995bnwiththelaunchof36newproductscomparedtojust15in2017136However31oftheEDHEC2019surveyrespondentsstillrequireadditionalETFproductsbasedonsustainableinvestmentwhichappearstobetheirtopconcern InvestorsarealsodemandingETFsrelatedtoadvancedformsofequityindicesnamelythosebasedonmulti-factorandsmartbetaindices30and28ofrespondentsrespectivelyand45ofrespondentswouldliketoseefurtherdevelopmentsinatleastonecategoryrelatedtosmartbetaequityorfactorindicessmartbetaindicessingle-factorindicesandmulti-factorindicesConsistentwiththedesiretouseETFsforpassiveexposuretobroadmarketindicesonly19ofrespondentsshowanyinterestinthefuturedevelopmentofactivelymanagedequityETFs [Editor] Editor’s note We are often approached by other businesses with special offers for our readers. 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