Thematic ETFs, "a financial innovation gone awry"

(Image: Pixabay CC0) Catering to the future expectations of investors is inherent to the world of finance which, as such, plays an import role in fostering economic growth through it's ability to innovate. However, financial innovations are not always flawless. A recent study co-authored by USI finance professor Francesco Franzoni reveals the significant performance inefficiencies of the increasingly popular 'thematic' exchange traded funds (ETFs). The findings of Franzoni and his colleagues has been featured in the Wall Street Journal and the Financial Times. The democratisation of many processes in the economy and society is one of many novelties of the digital age, impacting a range of domains such as communication and media. and financial markets. Compared to three decades ago, in fact, dealing with sophisticated financial products and services is widespread and investing in financial markets is not far from becoming a household chore.