Among investors, Exchange Traded Funds (ETFs) are gaining unprecedented popularity. Like mutual funds, they hold a portfolio of multiple securities in various asset classes providing more efficient long and short exposures. Additionally, because ETFs are traded like stocks, they provide much greater liquidity to investors. But, how do ETFs affect the prices of the stocks that comprise them, specifically the volatility and liquidity of these stocks? And do ETFs make it more difficult for investors to diversify some of the risk exposures they were created to reduce? In this episode of Inspiring Minds, Emily Brown ‘19 VSB talks with Rabih Moussawi, PhD, Assistant Professor, Finance, about some of the unintended consequences of one of the greatest financial innovations in recent decades.

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