Publisher:
The Ohio State University, Fisher College of Business, Charles A. Dice Center for Research in Financial Economics, [Columbus, Ohio]
;
Swiss Finance Institute, Geneva
The interplay between investors' demand and providers' incentives has shaped the evolution of exchange-traded funds (ETFs). While early ETFs offered diversification at low cost, later ETFs track niche portfolios and charge high fees. Strikingly, over...
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ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
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The interplay between investors' demand and providers' incentives has shaped the evolution of exchange-traded funds (ETFs). While early ETFs offered diversification at low cost, later ETFs track niche portfolios and charge high fees. Strikingly, over their first five years, specialized ETFs lose about 30% in risk-adjusted terms. This underperformance cannot be explained by high fees or hedging demand. Rather, it is driven by the overvaluation of the underlying stocks. Overall, providers appear to cater to investors' extrapolative beliefs by issuing specialized ETFs that track attention-grabbing themes
Working papers series / Charles A. Dice Center for Research in Financial Economics ; WP 2021, 01
Fisher College of Business working paper series ; WP 2021-03, 01
Research paper series / Swiss Finance Institute ; no 21, 03
