Brave new world: the evolution of ETFs

While exchange-traded funds have become an established feature in the financial markets, a reappraisal of the traditional approach of such funds has led to a new breed of ETF coming to market

Many investors have become familiar with exchange-traded funds (ETFs). The most widely known ETFs are those that track the performance of a stock market index. However, the range of ETFs has expanded in recent years and is set to grow even further in diversity. Traditional ETFs track a stock market index, such as the S&P 500 or the FTSE 100. ETFs are traded on stock exchanges in a manner similar to equities. The appeal of such traditional ETFs is five-fold. First, an investor may want to obtain access to a market but may want to do this relatively simply, without going through the proce...