Blaming or praising passive ETFs?

D’Hondt, Catherine, Younes Elhichou Elmaya and Mikael Petitjean
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D’Hondt, Catherine: Université catholique de Louvain, LIDAM/LFIN, Belgium

No 2021008, LIDAM Discussion Papers LFIN from Université catholique de Louvain, Louvain Finance (LFIN)

Abstract: We use random matching to study the trading behaviors of retail investors who hold passive exchange traded funds invested in stocks (P-ETFs). Using both trading records and survey data to control for all the key investor characteristics, we find strong evidence that retail investors trade differently when they hold P-ETFs. They have a higher portfolio size, a lower turnover, and keep their assets for a longer period of time than the control group of retail investors who hold individual stocks only. P-ETF retail investors are also better protected against stock gambling and those among them who follow a core-satellite approach are least likely to hold lottery-like stocks.

Keywords: ETFs; Stocks; Retail Investors; Passive Investing; Gambling Behavior (search for similar items in EconPapers)
JEL-codes: G11 G40 G53 (search for similar items in EconPapers)
Pages: 31
Date: 2021-08-17
New Economics Papers: this item is included in nep-cwa
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Persistent link: https://EconPapers.repec.org/RePEc:ajf:louvlf:2021008

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