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Innovations in exchange-traded funds: a comprehensive analytical overview

Author

Listed:
  • Vinh Huy Nguyen
  • Le Zhao
  • Suchismita Mishra

Abstract

A review of the prior innovations in exchange-traded funds (ETFs), including arbitrage trading, price discovery processes, short selling, hedging, and leveraged ETFs. An examination of the latest innovation, single-stock ETFs, provides preliminary insights. Approved for trading by the U.S. Securities and Exchange Commission in the summer of 2022, single-stock ETFs are based on highly liquid stocks. They appear to track the promised leveraged daily returns with an average deviation of one basis point. Single-stock ETF liquidity could be a concern going forward as financial institutions continue to create more of these ETFs.

Suggested Citation

  • Vinh Huy Nguyen & Le Zhao & Suchismita Mishra, 2024. "Innovations in exchange-traded funds: a comprehensive analytical overview," American Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 8(1), pages 57-80.
    • Handle: RePEc:ids:amerfa:v:8:y:2024:i:1:p:57-80
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