We examine the trading behavior of institutional investors in the Exchange Traded Fund (ETF) market from 1993 to 2007. We concentrate on the relation between cross-sectional institutional ETF ownership and returns, particularly on the relation between changes in ownership and future returns,...

We posit that institutional investors' allocation to exchange-traded funds (ETFs) is an outgrowth of inferior skill or a lack of commitment to successful active stock selection. Using institutional investors' 13F holdings, we show that ETF users — as compared to non-users — manage their...

The global ETF industry provides more complicated investment vehicles than low-cost index trackers. Instead, we find that the real investments of ETFs may deviate from their benchmarks to leverage informational advantages (which leads to a surprising stock-selection ability) and to help...