Tag Archives: Flash Crash

New State Street Site Battles Lies About ETFs

State Street Global Advisors, the sponsor of the SPDR family of ETFs, increased it efforts to educate the public about exchange traded funds by launching a new Web site ETF Fact or Fiction.

Already a thought leader in producing ETF educational resources, the new site is expected to address common misconceptions about the nuances of the ETF product structure. It will feature articles and commentary on timely topics and research from SPDR executives that should make it easier for investors to evaluate ETFs.

Some of the papers include:

  • Exchange Traded Funds: A Brief Introduction
  • How ETFs are Created and Redeemed
  • Expense Ratio is Not the Only Factor That Determines Total Cost

One paper, Separating ETF Facts From Fiction, addresses a lot of the negative misconceptions floating being propogated by anti-ETF forces. The section on the Flash Crash, which many people blame on ETFs, explains how ETFs were the victims of the market malfunction, not the villains. In addition, the use of derivatives and synthetic ETFs is also addressed. While I understand how U.S. ETFs that use swaps are safe, I’m still confused about the negative issues surrounding European synthetic ETFs, in particular how they are safe compared to U.S. ETFs. This paper also addresses shorting ETFs and the benefits of securities lending.

Overall, it’s a good place to find information beyond the basic knowledge people have about ETFs and delve into the facts behind a lot of the lies being pushed by those with something to lose as ETFs gain prominence.

State Street Global Advisors is the asset management business of State Street Corp. (Ticker: STT)