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Diversification or distortion? The role of ETFs in retail investor portfolios and performance

Zheng Wu et al.

Journal of Financial Stability2026https://doi.org/10.1016/j.jfs.2026.101514article
AJG 3ABDC A*
Weight
0.50

What the paper says

We examine how ETF adoption affects retail investor performance using a comprehensive panel of 524,181 Finnish investors tracked from 2007 to 2022. ETF adopters tend to be older, predominantly male, and more active, holding smaller but better-diversified portfolios. Importantly, first-time use of ETFs yields statistically significant improvements in risk-adjusted returns. ETF users also demonstrate greater portfolio resilience during financial crises. Our findings confirm that ETFs serve as effective tools for enhancing performance and managing risk for retail investors.

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https://doi.org/https://doi.org/10.1016/j.jfs.2026.101514

Or copy a formatted citation

@article{zheng2026,
  title        = {{Diversification or distortion? The role of ETFs in retail investor portfolios and performance}},
  author       = {Zheng Wu et al.},
  journal      = {Journal of Financial Stability},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1016/j.jfs.2026.101514},
}

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Diversification or distortion? The role of ETFs in retail investor portfolios and performance

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.