Short positions... exchange-traded funds’ record inflows

■ Exchange-traded funds (ETFs) have enjoyed record inflows of $1trn this year, says Michael Wursthorn in The Wall Street Journal. They exceeded the threshold at the end of November, surpassing last year’s total of $735.7bn. The global ETF asset market is worth $9.5trn, twice its value at the end of 2018. Asset managers Vanguard, BlackRock and State Street control over three-quarters of all US ETF assets. Interest in tracker funds was boosted by “a lack of highyielding alternatives” and rising stockmarkets; the S&P 500 has gained 25% this year. Over half of the record 380 ETFs launched in the US in 2021 are actively managed, with managers seeking to launch funds in areas “not already dominated by the industry’s juggernauts”. Asset manager VanEck has just launched an ETF following the food industry, while Tuttle Capital Management launched its FOMO ETF (“fomo” stands for fear of missing out), which targets stocks popular with individual investors.

■ The US Department of Justice is launching a large-scale criminal investigation into short-selling by hedge funds and research firms, says Reuters, “scrutinising their symbiotic relationships and hunting for signs that they improperly coordinated trades or broke other laws to profit”. The investigation is looking into how hedge funds use research to set up their bets. Several stocks, including popular short targets such as Luckin Coffee and

Banc of California will be investigated, along with a dozen funds, although they have not been named. In the past year or so, some retail investors have launched counterattacks by coming together to buy shares in popular shortselling targets to bolster their prices and inflict losses on the bearish hedge funds.