Exchange-Traded Funds; Synchronizing Information and Noise in Capital Markets

Exchange-Traded Funds (ETFs) have colonized pretty much every available niche in the investment world-frequently at the expense of traditional vehicles such as mutual funds and hedge funds. And the land grab has apparently just began. This means it is time to start thinking about unintended consequences.One of history's clearest lessons is that when financial innovation really gets going it tends to race ahead of regulators, who only catch up after an idea has revealed its dark side in some painful, sometimes system-threatening fashion. And while ETFs have not reached the rarified heights of, say, mortgage backed securities; they are raising a few red flags