Additionally, Burns notes that ETFs make up a large proportion of emerging market investments and investors are more likely to be swayed by sentiments in developed markets than anything that has to do with the fundamentals of the emerging market, as witnessed in 2008. [Emerging Market ETFs Back in Favor.]
Not everyone has agreed that ETFs distort the commodities marketplace. When futures-based ETFs were under regulatory examination last year, providers like United States Commodity Funds defended charges that their ETFs were leading to irregularities. During 2008’s run-up in oil prices, United States Oil Fund (NYSEArca: USO) was a seller of contracts and a buyer when prices were falling.
For more information on trading ETFs, visit our ETF 101 category.
Max Chen contributed to this article.