Volatility fears over exchange-traded fund industry
By the end of 2016, exchange-traded funds (ETFs) had a massive $3.55tn of assets under management compared to about $3tn in hedge funds, which are shrinking by the day and will never be higher than ETFs again. The US Securities and Exchange Commission is now launching a major investigation into the ETF industry due to fears over the potential these funds have for increasing volatility in financial markets.
Last year 37 per cent of trading on the New York Stock Exchange occurred in the last 30 minutes of business because that’s when ETFs adjust their holdings to remain in line with the index. Photo: AFP