• Michael I. C. Nwogugu


Indices, index funds and exchange-traded funds (ETFs) have become major asset classes in debt, equity, real estate, currency and commodity markets worldwide—and their management, maintenance and use often occurs within the context of human–computer interactions (HCI). As of 2018, there were more indices in the world than the number of exchange-traded companies. The relatively sudden and significant growth of indices, passive/active ETFs and index funds during 1995–2018 (combined with the Internet, increasing volume of cross-border transactions, and improved global settlement/clearing systems) have increased the potential for systemic risk, financial instability and the failure of regulations. The major problem is that more than US$3.5 trillion is invested in indices through ETFs, index funds and equity swaps apparently without regard to the quality and valuation of the underlying companies and commodities. The net effects are that: (i) the companies and commodities in these indices are overvalued and enjoy artificial price support (from these ETFs and index funds); (ii) there is substantial over-investment and “Gambling” in the underlying companies and under-investment in non-listed, micro-cap, small-cap and emerging markets companies, which affects economic growth, development and capital mobility; and (iii) these indices, index funds and ETF and their component companies pose increasing systemic risk and financial instability threats.


Indices Index funds Exchange-traded funds Debt Equity Risk management Systemic risk Portfolio management Allocation 


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Authors and Affiliations

  • Michael I. C. Nwogugu
    • 1
  1. 1.EnuguNigeria

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