The history of the listed index fund, better known by the abbreviation ETF, is a unique success story.
The fact that ETFs are currently less fun for investors does not change that: an ETF replicates the performance of a stock market index.
So if the Dax falls as it is currently, the ETF will also give in to the same extent.
Nobody likes the latter, but index funds almost only have their good side for investors.
They are cheap, easy to trade and easy to understand.
Unfortunately, like everything in life, ETFs also have their downsides: there has been a debate for a long time about whether index funds are harmful to the financial system.
For example, if all investors only bought ETFs and no longer formed an opinion on individual stocks, it would hardly be possible to find the right price for a stock.
Researchers Alessandro Moro and Alessandro Schiavone identified another serious problem of ETFs in a recent study.
Because the good tradability of ETFs also has a disadvantage: Investors can quickly enter individual markets, but exit just as quickly.
This can lead to distortions, as the researchers have found with regard to the emerging countries.
During the Corona crisis, ETF investors quickly withdrew their money from the region, exacerbating the price fluctuations there.
Such stock market shocks are usually not limited to the financial market, but also damage the companies and the countries in which they occur.
In the case of the companies, the bad mood then threatens to spread to their actual business,
Classic investors such as insurance companies and pension funds act more slowly in such situations, they are more long-term oriented.
ETF investors, on the other hand, often act tactically and on a shorter-term basis, according to the study.
Despite all the appreciation for the investment instrument ETF, this is bad news for the global financial system.
It becomes more unstable.Keywords: