Uncharted waters: Investors get access to foreign exchange-traded funds

Abstract

In 2022, Russian investors will get access to the wide possibilities of the global financial market. The Bank of Russia opens the market for foreign exchange-traded funds (ETFs) — one of the main savings instruments for households. The economy of ETFs differs from other investment funds, whose shares do not have secondary market. The opening of the ETFs market is intended to solve a number of issues for retail investors: moving away from the preference to individual foreign shares towards portfolio diversification, cost reduction, ensuring sustainable profitability, abandoning the aggressive securities trading, and supporting market competition. Soon, ETFs will be one of the driving forces in financial markets. However, their rapid growth is fraught with little-studied effects.