Exchange-Traded Funds: An Overview of Institutions, Trading, and Impacts

Exchange-traded funds (ETFs) have grown substantially in diversity and size in recent years, reflecting a broader shift toward passive, index investing. 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 provides a unified framework to examine these issues and review the research to date, demonstrating that ETFs have extended significant benefits to investors and to the functioning of markets that meaningfully outweigh any perceived or actual weaknesses.