Quentin D. Solano
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Quentin D. Solano in Breaking news,

B. of A. warns the rise of ETFs is distorting the stock market


Appearances can be deceiving.

The number of passive investors who trade stocks via exchange-traded funds has surged in recent years in what some see as a sign of a dysfunctional market in the making. Strategists at Bank of America Merrill Lynch, led by Savita Subramanian, earlier this week warned in a report that the surge of ETFs is distorting the stock market and making it less efficient in the process. Bank of America Merrill Lynch ETFs currently account for nearly a quarter of U.S. stock-market trading volume versus 76% for individual stocks. Three years ago, ETFs accounted for 20%. Meanwhile, the percentage of equity-fund assets has jumped in the wake of the U.S. financial crisis, rising to 37% in 2017 from 19% in 2009, according to Bank of America.