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Are ETFs Killing Future Stock Market Returns? | Trillions

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February 2, 2023

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The rise of index funds, exchange-traded funds and passive investing in recent years has been nothing short of momentous, as investors across the US and around the world learn to rely on slow-and-steady returns. But there’s been rising concern over the potential side effects of this sea change in the way stocks are bought and sold. The new worry is that, because index funds (and ETFs) are so cheap and easy to access, more people will use them—and this will push down future expected returns for everyone.

On this week’s episode of Trillions, we talk to Martin Schmalz, professor of finance and economics at the University of Oxford, about his latest paper on the topic, “Index Funds, Asset Prices, and the Welfare of Investors.” We discuss and debate his paper as well as some other concerns, such as common ownership, and whether any public policy is needed.

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Money goes where it's treated best. That simple truth is a big reason why more and more money—trillions, in fact—flows into a powerful, low-cost tool that's quietly transformed investing in recent years. Exchange-traded funds, or ETFs, let you invest in everything from the stock market to gold like never before. This biweekly podcast will demystify them—and delight you in the process.

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Are ETFs Killing Future Stock Market Returns? | Trillions · Bloomberg Podcasts · Sentinel