Efficiency of exchange-traded funds

• 11 May 2016

Exchange-traded funds (ETFs) are an efficient way for small investors to invest in a specific index. In this Vox Views video, Semyon Malamud discusses the implications of the growing number of ETFs. In a perfectly efficient market, the price of the ETF should be equal to the net asset value, but deviations create arbitrage activities and lead to market inefficiencies. The video was recorded in April 2016 at the First Annual Spring Symposium on Financial Economics organised by CEPR and the Brevan Howard Centre at Imperial College.