A World Without ETFs

Published on by on March 19, 2014 | Updated April 2, 2014

Exchange traded funds hit the scene in 1993 and have since revolutionized the investing world. The low cost and transparent structure of ETFs has resonated well with investors, as the industry as a whole has accumulated more than $1.5 trillion in total assets. We thought it would be fun to imagine a world where ETFs didn’t exist, and what today’s investment world would look like without these powerful products [for more ETF news and analysis subscribe to our free newsletter].

1. More gold would be buried in your backyard.

2. Ben Stein would not know how to invest.

3. Jim Cramer would need a new investment vehicle to hate.

4. The 2010 Flash Crash would never have happened.

5. Investing in global warming would be much more difficult.

6. Tax season would be a far bigger headache.

7. The options market would lose a lot of liquidity.

8. There would be nobody to misunderstand how to use leveraged ETFs.

9. The band “Escape The Fate” would no longer be confused with investment products #ETF.

10. Financial advisors will find themselves actually working again.

11. Analyst ratings from JP Morgan, Goldman Sachs, and Bank of America will matter again.

12. Brokerage firms’ profits will soar as investors are forced to take on more positions to remain diversified.

13. Mutual funds will continue to overcharge for underperfomance.

14. Traders will no longer be able to move in and out of entire asset classes with ease.

15. Average investors can forget about having commodity exposure.

16. Bond investing would be a major hassle.

17. Direxion would have to find another direction.

18. Self-directed investors would be left in the dust (again).

Dodge Viper19. A “spider” would only refer to an arachnid. A “viper” would still be a toss-up between a snake and a car.

20. We’d hear even more about AAPL, TSLA, and FB.

21. Major news outlets would not be able to call them “EFTs” any longer.

22. $1.7 trillion in assets with no place to go.

23. Short-selling would still have unlimited downside risk.

24. “Home Country Bias” would infect more retail portfolios.

25. Investors would pay an extra $17 billion annually in mutual fund fees.


Follow me on Twitter @JaredCummans.

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Disclosure: No positions at time of writing.