Michael Steinhardt, hedge fund legend and chairman of WisdomTree Investments (NasdaqGM: WETF), on Thursday said there is no evidence that exchange traded funds are pushing around the prices of individual stocks.

“I think you would have to prove that,” Steinhardt said during a CNBC interview when asked if trading in ETFs is driving the prices of underlying stocks, rather than the other way around.

“And if there are certain limited instances of that occurring, then that can be dealt with. It’s really not the major point of ETFs,” he added. “ETFs have grown more quickly than any other form of investment management now for a long time, and with good reason.”

ETFs were in the spotlight Wednesday as a Senate subcommittee held a hearing on the impact of the financial products on the market. ETFs are baskets of securities that trade like individual stocks.

Eric Noll, head of transaction services at Nasdaq OMX, during the hearing said ETFs shouldn’t be blamed for market volatility, but rather uncertainty over the European debt crisis, government finances, troubled banks, unemployment and other challenges. [Senate Hearing on ETFs]

“The returns from ETFs are far better than mutual funds or other forms of investment management, period,” said Steinhardt, who closed his hedge fund in 1995 after a brilliant run. “No close comparison. And that’s the reason why ETFs are popular.”

He said if some leveraged and concentrated ETFs, for example, “reach a point where they dominate limited markets,” then regulators should do something about it. “It’s a minor issue in ETFs. And if it really exists, there are mechanisms by which that can be controlled. I don’t see it as a major problem,” Steinhardt told CNBC.

WisdomTree manages nearly $12 billion in ETF assets. The firm is planning a share offering. [WisdomTree Readies Share Offering Before Q3 Results]

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