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Unformatted text preview: Exchange-traded funds Trillion-dollar babies Jan 21st 2010 From The Economist print edition A fast-growing asset class NOT all financial innovations have come to grief in the credit crunch. The explosive growth of exchange-traded funds (ETFs), investment pools that are listed on stockmarkets around the world, continued throughout the past decade. At the end of 2009 ETF assets under management topped the $1 trillion mark for the first time, according to BlackRock, a fund-management firm. The industry’s assets were just $40 billion at the end of 1999. The industry has been growing faster than hedge funds, but with much less negative publicity. ETFs are usually linked to a stockmarket index or asset class and give retail investors a way of diversifying their assets at relatively low cost. The average expense ratio—the proportion of assets that gets eaten up by the cost of running a fund—of an American-based ETF was 31 basis points (less than a third of a percentage point) at the end of 2009. By contrast, the average expenses of index-tracking mutual funds were 78 basis points, and end of 2009....
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This note was uploaded on 10/11/2011 for the course FBE 441 taught by Professor Callahan during the Fall '07 term at USC.
- Fall '07