Exchange Traded Funds 101 For Economists

Martin Lettau and Ananth Madhavan

No 24250, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Exchange-traded funds (ETFs) represent one of the most important financial innovations in decades. An ETF is an investment vehicle that trades intraday and seeks to replicate the performance of a specific index. In recent years ETFs have grown substantially in assets, diversity, and market significance. This growth reflects the rise in passive asset management where investors seek to track a benchmark index rather than outperform the market as a whole. As a consequence, there is increased attention by investors, regulators, and academics seeking to assess and understand the implications of this rapid growth. This article explains the key drivers of ETF growth and their implications for economists and policy makers.

JEL-codes: G0 G12 G2 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-fmk
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Published as Martin Lettau & Ananth Madhavan, 2018. "Exchange-Traded Funds 101 for Economists," Journal of Economic Perspectives, vol 32(1), pages 135-154.

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