ETFs have been traded for the past 23 years, they're low fees and liquidity have made them a very popular financial product. That being said regulators have some concerns. The WSJ breaks down the pros and cons of the ETF industry in this article.
After 23 years and $2 trillion invested, regulators and advisers are raising the rhetoric on this fast-growing financial product, a cousin to traditional mutual funds (which still dominate with nearly $13 trillion in assets). The SEC is chewing on a list of questions about the products’ trading and marketing in the wake of the Aug. 24 “flash crash,” when the price of many ETFs appeared to come unhinged from their underlying value, and some financial advisers say they are now wary about recommending the products to clients. The SEC’s Luis A. Aguilar wonders if the ‘entire ETF ecosystem’ should be re-examined. PHOTO: BRENDAN SMIALOWSKI It isn’t as if ETFs haven’t faced questions before, from both regulators and financial-industry insiders. However, the recent questions have taken this scrutiny to a new level.