Age of the ETF

Stock markets have a new purpose. Once devoted to trading stocks and setting their prices, they are now the venue for buying and selling something other than shares: exchange traded funds.

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Exchange traded funds are taking over markets. Shares in Apple, the world’s biggest and most heavily traded company, turn over more than $3bn each day. But that is dwarfed by the biggest ETF, State Street’s SPDR S&P 500, which trades more than $14bn each day. Five of the world’s seven most heavily traded equity securities are ETFs.

It is not just in trading that ETFs dominate. Their assets under management were negligible 20 years ago, but now exceed $3tn.

This series examines the global rise of ETFs.

Copyright The Financial Times Limited 2017. All rights reserved.
Copyright The Financial Times Limited 2017. All rights reserved.

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Re-ordering the fund manager and financial adviser relationship has done some good

Advocates say they add liquidity while sceptics point to potential for compounding volatility

ETFs that focus on investing ‘factors’, or characteristics of asset classes, pose a threat

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Vehicle’s lower fees and greater insight are proving popular in the bond universe

Industry on track to shut largest number of funds as ‘see what stick’ approach fades

Big inflows mask flightiness of those pumping money into such funds

The easy access exchange traded funds offer investors comes with a sting in the tail

One asset manager has been a big winner since the Republican’s victory lifted the dollar

They have had astonishing growth but ETFs also suggest more frequent trading does not pay

Most actively managed funds are not beating the index

Odd conduct of funds focused on gold mining highlight case for regulatory review

Central bank buying has helped the stock market but angered pension funds

American counterpart far exceeds region in terms of assets held in funds and products

US stockpickers remain far too heavily weighted in cyclicals and inflationary stocks

Warren Buffett is among those sceptical that active management can fight back

Funds provide investors with critical liquidity at times of wider markets stress

Can market sell instant gratification when underlying securities are harder to trade?

The products have transformed US bourses, but some worry that ETFs are breeding systemic risks

Surge in passive investing fanned by these funds is a boon to traditional investors