Understanding ETFs

Key players in the ETF ecosystem and why they matter to investors

January 21, 2022

Figure 1. ETF trading volume has exploded over the last 20 years
This chart shows nominal ETF trading and ETF cash flows since 2000. It demonstrates the dramatic increase in ETF popularity as monthly trading volumes, which were less than $50 billion at the turn of the century, now regularly are in the hundreds of billions of dollars. In addition, cash flows have risen during this period from less than a trillion dollars to about $7 trillion today.

The ETF ecosystem explained

Figure 2. A deeper look at the key ETF participants
This chart highlights the roles of the major market participants in the ETF ecosystem. Investors trade ETFs to gain targeted investment exposure. Issuers launch ETF products and control the creation/redemption process. Exchanges provide orderly markets for trading. Market makers are the primary liquidity providers for ETFs.
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