The number of exchange traded funds (ETFs) worldwide grew markedly during the period from 2003 to 2022. There were 8,754 ETFs globally in 2022, compared to 276 in 2003. As of 2022, ETFs worldwide managed assets up to almost 10 trillion U.S. dollars.
What are ETFs?
Exchange traded funds (ETFs) have been available on the financial markets since the early 1990s. They are one of the main types of investment funds, alongside mutual funds, insurance funds, pension funds, real estate funds, hedge funds or private equity funds. The main feature which distinguishes exchange traded funds from other investment funds is that they are always traded on a stock exchange (like common stock) and their price is determined through purchase and sale transactions.
Tracking stock indices
The main purpose of ETFs is to replicate the performance of an index or a given financial instrument, rather than outperform it. For instance, an investor wishing to achieve the same performance as the Dow Jones Industrial Average index could invest in the DJIA ETF. Some of the ETFs also allow tracking the opposite of index performance – if an investor thinks that the price of silver will drop, he can purchase the shares of a reverse silver ETF in order to earn money on falling silver prices.
