Stock traders are dramatically dropping out of the stock trading business. Individual shares no longer are the most actively traded securities in the market. Each day, a vast majority of trades are in ETFs and this is on the rise in 2017. In truth, daily volume has increased among both ETFs and stocks, but the growth hasn’t been equal.
Key Takeaways:
- As weird as it may seem, individual shares no longer are the most actively traded securities in the market. That distinction goes to exchange-traded funds, which took in a record $400 billion in the past year to become a $3.8 trillion industry.
- Each day, a vast majority of trades are in ETFs, such as the SPDR Financial Select Sector Fund, or XLF, which has an average daily volume of 105 million shares, making it fifth-most traded fund.
- These figures have fueled criticism from active managers such as Sanford C. Bernstein & Co., which noted that passive investing is “worse than Marxism.” Goldman Sachs Group Inc. echoed a similar sentiment, arguing that ETFs and other passive vehicles increase the likelihood that equity shares move in tandem.
“Still, nearly half of the top 20 traded securities by value are ETFs, including the top two, according to Eric Balchunas, ETF analyst at Bloomberg Intelligence.”
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