This week for Quartz members: ETFs are eating the market

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Dear Quartz members—

The global market for exchange-traded funds reached $5.46 trillion this year, nearly five times what it was a decade ago. That growth has transformed financial markets and is the focus of our field guide this week.

ETFs make it much easier and cheaper to own and trade big groups of stocks, fueling a huge shift toward passive investing. As Elizabeth MacBride reports in our state of play, during some months the most widely traded stock is SPY, an ETF that tracks the S&P 500. And some other popular ETFs, like QQQ, trade more than the underlying stocks they represent.

The ETF revolution has also ushered in a new set of challenges. By favoring big, liquid stocks, ETFs have inadvertently made the public markets a less welcoming home for small, innovative companies. They have increasingly turned to venture capital and private equity when they have needed to raise capital. That has propelled a two-tier market—a private one for the wealthy, and public markets for everyone else.

Yet ETFs do still have the capacity to democratize investing, and a new generation of online brokers and mobile apps are focused on doing just that.

It’s worth remembering, though, amid the stampede to ETFs, that they’ve never truly been tested in a major crash. That has some market watchers worried.


  • The first ETF, the Toronto 35 Index Participation fund, was launched in 1990.
  • ETFs account for 10% of global assets held in funds and roughly 30% of trading in US markets.
  • Five companies account for 90% of the ETF market.
  • The number of US public companies has dropped by more than half since its peak in the late 1990s, while the private market grew sevenfold since 2002, according to McKinsey.


Join us for a discussion with Elizabeth about exchange-traded funds and how they’re changing global capital markets. We’ll discuss the pros and cons of ETFs for investors, for innovation, and for the broader economy, as well as why ETFs didn’t democratize investing the way proponents hoped.


Reporters Jeremy B. Merrill and Hanna Kozlowska found that dozens of older conservatives drained their retirement savings into an overpriced precious metals scheme supercharged by fear-mongering Facebook ads.

The ads drove a boiler-room-style sales operation that played on victims’ fears of big government and Wall Street, convincing them to invest their retirement savings in ways that instantly lost thousands of dollars. The operation relied on millions of dollars of Facebook ads and has run mostly unchecked for nearly two years.

You can read the main story here and the whole collection here, where we’ll be posting follow-up stories tomorrow. You can also sign up for the Quartz Investigations team’s newsletter here or join a conference call with the team on Tuesday (more details on that below).

This story was possible in part because readers were willing to talk to us about the ads they were seeing online. If you have information you’d like to share with the Quartz Investigations team, you can email them at or use a secure method described on our tips page.


Tue., Nov. 19, 11am ET: Investigations editor John Keefe and reporters Jeremy B. Merrill and Hanna Kozlowska will discuss their story on how Facebook ads contributed to a scheme to trick conservatives out of their savings.

Wed., Nov. 20, 11am ET: Quartz’s deputy global news editor Rashmee Roshan Lall and deputy news editor Hasit Shah will parse the ramifications of the upcoming UK general election. They’ll cover the different possible outcomes of next month’s vote, what it means for Brexit, and why the rest of the world will be paying attention.

Fri., Nov. 22, 11am ET: Elizabeth MacBride and I explore how ETFs are eating global markets.

We’ll be taking questions and comments live on each of these video conference calls, accessible at the usual location.

If you’d like to dial in, use the following numbers:

UK: 0800-014 8469
USA: 866-226 4650

For all of the numbers, the access code is 722 994 440.

With best wishes for a productive week,

Walter Frick
Membership editor, Quartz