1. Exchange-Traded Funds: Introduction
  2. Exchange-Traded Funds: Background
  3. Exchange-Traded Funds: Features
  4. Exchange-Traded Funds: Biggest ETFs and ETF Providers
  5. Exchange-Traded Funds: Active Vs. Passive Investing
  6. Exchange-Traded Funds: Index Funds Vs. ETFs
  7. Exchange-Traded Funds: Equity ETFs
  8. Exchange-Traded Funds: Fixed-Income and Asset-Allocation ETFs
  9. Exchange-Traded Funds: ETF Alternative Investments
  10. Exchange-Traded Funds: ETF Investment Strategies
  11. Exchange-Traded Funds: Best Practices for Trading ETFs
  12. Exchange-Traded Funds: Conclusion

Exchange-traded funds (ETFs) have registered phenomenal growth since the introduction in 1993 of the first ETF – the venerable S&P 500 ETF (SPY), units of which are known colloquially as “Spiders.” Nearly a quarter-century later, ETFs are likely to be found in most portfolios, from retail investors’ five-figure accounts to institutional money managers’ multi-billion dollar holdings. (Related: ETFs Vs. Index Funds: Quantifying The Differences)

The exponential growth of ETFs can be attributed to their many advantages (discussed in greater detail later in this publication) – such as their relatively lower cost, transparency, tax efficiency and liquidity. But their very popularity is causing some angst about the potential negative effects of such near-ubiquity. Are ETFs really as liquid as they appear to be? And can the price dislocations between ETFs and their underlying baskets of securities experienced during short-lived selloffs – such as the “Flash Crash” of May 2010, and August 2015 – portend anomalous behavior that could prolong a bear market?

Figure 1 shows the tremendous growth in ETFs and ETPs (Exchange-Traded Products) over the period from 2005 to 2017. Globally, assets have grown from approximately $500 billion in 600 ETFs in 2005, to more than $4 trillion in over 5,000 ETFs by September 2017. ETF assets are forecast to grow rapidly for the foreseeable future. Participants in a 2016 PwC survey of ETF sponsors and managers, and asset management firms said they expected global ETF assets to exceed $7 trillion by 2021.

Figure 1: Global ETF and ETP Growth

Source: ETFGI.com


Exchange-Traded Funds: Background
Related Articles
  1. Investing

    How Big Is the Global ETF Market? (BLK, STT)

    Discover why ETFs are growing much faster than mutual funds, and why some experts predict the ETF market will double by 2020.
  2. Investing

    The Main Attractions of ETF Investing (SPY)

    As the popularity of ETFs soar, a look at the main benefits of these investment vehicles.
  3. Investing

    The Advantages of ETFs Compared to Index Funds

    With the ongoing ETF boom, ETFs gain more variety and increased competition in the market leads to further investors' advantages compared to index funds.
  4. Investing

    One Area of ETFs Is Not Growing: Options

    Options on ETFs have stagnated for years.
  5. Investing

    5 Signs It's Time to Dump Your ETF

    You’ve bought into your favorite ETF, and it's been a great ride. When should you exit? Here are the top signals to exit an ETF position.
  6. Investing

    Guide To ETF Providers

    The exact number of ETFs on the market at any one time ebbs and flows, these twelve ETF providers offer hundreds of popular ETFs.
  7. Investing

    Actively Managed ETFs: The New Mutual Funds?

    Actively managed ETFs offer increased earnings, but are the cons worth the potential payoff?
  8. Investing

    A Guide To ETF Liquidation

    There are a lot of ETF options, but not all have staying power. Learn what happens when an ETF fails.
  9. Financial Advisor

    What All Investors Should Know About ETFs

    ETFs have become popular for their versatility and variety, but that doesn't mean they're always the right choice and that they're all created equal.
Frequently Asked Questions
  1. Why is there a negative correlation between quantity demanded and price?

    Learn what the law of demand is, the basic assumption of the law of demand and why there is a negative correlation between ...
  2. If an IRA owner dies after starting required minimum distributions (RMD) but the spouse is under 70½, can the spouse roll over the IRA into his/her own IRA, and stop RMDs until age 70½?

    If the IRA owner dies after the required beginning date (RBD) and his/her beneficiary is his/her spouse, the spouse beneficiary ...
  3. How do credit bureaus make money?

    Take a closer look at how credit bureaus make money, and learn about the kind of services they provide to both lenders and ...
  4. I make over $120,000/yr and my adjusted gross income precludes standard IRA contributions. My contributions to my 401(k) plan at work are limited to $18,500/yr. It seems I'm being penalized for my income. Are there other retirement savings options av

    Only your eligibility to deduct contributions will be affected. You may still make a nondeductible contribution up to the ...
Trading Center