Exchange traded funds have gotten some negative publicity lately as investors and the media look for scapegoats to explain market volatility and recent trading scandals.
However, some analysts say the criticism of ETFs is overblown.
“ETFs can’t be culpable for the growing market volatility over the past few years,” writes Benjamin Shepherd for MoneyShow.
He notes recent trading scandals at Goldman Sachs and UBS have involved ETF trades, while European regulators have expressed concerns recently over ETFs. [Transparency Issues]
“But these questions are largely arising because ETFs are relatively new instruments, so both investors and regulators are still learning about how ETFs are constructed and utilized,” Shepherd wrote.
“The real issue is how bad actors have used ETFs—something that can’t be blamed on the ETF structure itself,” he added.
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.