Over the past 19 years, exchange-traded funds have become a favorite investment product of advisors. ETF assets stand at just over $1 trillion in the U.S. alone, according to research firm Morningstar. That's a 7,000 percent increase from 1998, when Morningstar started tracking ETF data and assets stood at $13.7 billion. In that same time period, open-end mutual funds grew from $3.7 trillion to $8 trillion, a 116 percent increase.
While ETFs are more popular than ever, they are not without risk. The bulk of ETFs may seem benign, but a rising number of innovative exchange-traded products could lead to potential problems-particularly if institutional interest in ETFs as trading vehicles continues to grow.
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