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The FinReg Pod

Jan 30, 2020

Ryan Clements, assistant professor at the University of Calgary Law School, discusses his doctoral research on how Exchange Traded Funds may contribute to financial market instability. Ryan acknowledges the fact that ETFs have made the average investor immeasurably better off by providing low-cost diversification, but his research has shed light on what is a classic tragedy of the commons problem, whereby what is rational for individual investors could weaken the market as a whole. Clements also talks about how the growth in ETFs has led to investor herding behavior, and how this may be contributing to market inefficiencies.

Check out the following articles for more information:

New Funds, Familiar Fears: Do Exchange Traded Funds Make Markets Less Stable? Part I, Liquidity Illusions by Ryan Clements

New Funds, Familiar Fears: Are Exchange Traded Funds Making Markets Less Stable? Part II – Interaction Risks by Ryan Clements

The Hidden Dangers of the Great Index Fund Takeover by David McLaughlin and Annie Massa

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