Little did these traders during the 1987 stock-market crash know it, but the event precipitated the exchange-traded fund. Photo: Maria Bastone/AFP/Getty ImagesThe growth of “passive” investing through index funds and quantitative strategies over fundamental analysis and stock picking isn’t something that just happened overnight. After the 1987 crash, regulators challenged the market to design a mechanism for index portfolio trades. Introduced in 1993 as essentially a stock warehouse, ETFs grew steadily for the next several years as institutions capitalized on the ease of moving in and out of sectors and making tactical bets. Journal Report Podcast Subscribe to the Journal Report podcast at wsj.com, on iTunes or Google Play Music.

Source: Wall Street Journal March 06, 2017 03:07 UTC