Exchange Traded Funds as an investment product in the global market

Abstract

The aim of the present paper is the analysis of ETFs as a financial product in the global market, as well which are their potentials, the way they trade, the main advantages and the disadvantages for investors. Moreover, main purpose is the detection of the largest ETFs in global market according their Assets Under Management, and the analysis of ESG ETFs which have become a trend and form the future for the ETF universe. The methodology of the study to achieve the above goals is initially a literature review for the understanding of the ETFs’ main characteristics and peculiarities as an investment product and the clarification of basic concepts such as the definition of ETFs, the ETF universe, the Net Asset Value, the main ETF issuers, their legal forms, their special risks, the differences between ETFs and Mutual Funds, the performance of ETFs, their valuation and some alternative ways to use them. Moreover, the categorization of ETFs according to their asset class and the detection of the top 10 of each category helped us for analyzing their performance and their investing value in exchanges. Finally, research about ESG ETFs was conducted in order conclude into some recommendation and future challenges for the development of ESG ETFs, such as the improvement of the overall sustainability, the enhancement of the coherence, the growth of ESG ETFs emerging economies and the increase of SDG coverage of ETFs.