Innovations in exchange-traded funds: a comprehensive analytical overview

Vinh Huy Nguyen, Le Zhao and Suchismita Mishra

American Journal of Finance and Accounting, 2024, vol. 8, issue 1, 57-80

Abstract: A review of the prior innovations in exchange-traded funds (ETFs), including arbitrage trading, price discovery processes, short selling, hedging, and leveraged ETFs. An examination of the latest innovation, single-stock ETFs, provides preliminary insights. Approved for trading by the U.S. Securities and Exchange Commission in the summer of 2022, single-stock ETFs are based on highly liquid stocks. They appear to track the promised leveraged daily returns with an average deviation of one basis point. Single-stock ETF liquidity could be a concern going forward as financial institutions continue to create more of these ETFs.

Keywords: ETF; exchange-traded fund; price discovery; arbitrage; short selling; hedging; leverage; innovation. (search for similar items in EconPapers)
Date: 2024
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