Exchange-traded Funds

Abstract

Exchange-traded funds (ETFs) are (mostly) passive index-tracking investment products granting investors cost-effective and liquid exposure to a wide range of asset classes and geographical areas. These products have experienced impressive growth since 2000, and they weathered the crisis relatively unscathed (see Chart A). The growth of these products, the pace of the related fi nancial innovation and (linked to the latter) their increasing degree of complexity have attracted supervisory bodies’ attention at the international level. This box summarises the key characteristics of ETFs, describes the evolution of ETFs in terms of the number of funds and assets under management (AuM) (also providing where possible relevant euro area or EU data) and fi nally sketches in broad terms the issues that may require closer scrutiny in the near future by the international fi nancial stability, supervisory and regulatory communities.