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There Are Now More ETFs in US Than There Are Individual Stocks - Bloombergwww.bloomberg.com/news/articles/2025-08-25/us-etfs-eclipse-total-number-of-stocks-in-paradox-of-choice-for-investors
592 sats \ 7 comments \ @Scoresby 20h charts_and_numbers
Why would someone compare these two numbers?
Thanks to a breakneck pace of new launches, there are now more than 4,300 exchange-traded funds, a figure that for the first time eclipses the total number of stocks, currently hovering around 4,200, data compiled by Morningstar shows. ETFs account for about a quarter of the total universe of investment vehicles, up from 9% a decade ago, according to Investment Company Institute data.
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102 sats \ 2 replies \ @SimpleStacker 17h
This is problematic because it actually makes all stocks more correlated and makes diversification harder to accomplish, since so many stock prices are just driven by ETF fund flows.
Another problem is that it has the potential to disconnect stock prices from estimates of valuation, since, again, the prices are driven by ETF fund flows. It thus becomes more a matter of predicting which ETFs are going to be piling into the stock rather than anything fundamental to the company itself.
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30 sats \ 1 reply \ @Scoresby OP 16h
This is super helpful! Thanks for the explanation. I was feeling that it didn't seem like a big deal, but clearly it is more significant than I thought.
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102 sats \ 0 replies \ @SimpleStacker 16h
Similar thing happened with mortgage backed securities prior to the 2008 financial crisis.
Investors thought geographically diverse portfolios of mortgages were safe because local housing markets were supposed to be uncorrelated.
But they didn't realize that the aggregate boom in MBS demand was raising house prices everywhere at the same time, creating correlations that didn't exist in the historical data. So when the housing markets started imploded, they started imploding everywhere
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102 sats \ 1 reply \ @zuspotirko 17h
Idk who first came up with this quote but:
there are now more recipes than there are ingredients
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0 sats \ 0 replies \ @Scoresby OP 17h
Yes, it gets at the above question, though, doesn't it: why is it a problem if there are more recipes than ingredients? Seems like a good things to me.
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0 sats \ 0 replies \ @kepford 16h
I'm not sure this is a bad thing on its own. Just as I question the idea of the optimal number of anything. I wanna know why x should be above y. Its not a given.
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0 sats \ 0 replies \ @ladyluck 20h
ETFs have moved from a niche product to a dominant force, capturing a huge share of investor dollars and fundamentally changing market dynamics and liquidity
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